Is Your Checking Account Saving You $$$$ or Costing You?

By Remar Sutton, DCU StreetWise Spokesperson

All checking accounts are not created equal. Depending on your personal financial needs and habits, selecting the right checking account can save you up to several hundred dollars annually. Select the wrong account, and even a “free” account can cost you big bucks. The following questions can help you take a look at your current bank or credit union checking account.

Is the “free” checking really free? Some financial institutions promote “free” checking accounts that may have no “monthly service charge” but milk a customer’s account for lots of per-service fees every time you use a service. Such fees include ATM fees (including balance inquiry fees), bounced check fees, per-check fees (over a limited “free” number), check card fees, phone transaction fees, online banking fees, etc. In contrast, a checking account that has a small monthly service charge but then does not charge separately for a range of useful services can be a much better deal. DCU Free Checking with Direct Deposit and DCU Free Checking offer checking with no minimum balance and no monthly fees.

How high is the minimum balance required to earn interest and/or avoid a monthly service charge? Many checking accounts don’t charge a monthly service fee if you maintain a minimum average balance in the account; many of these also pay interest or dividend earnings if the minimum balance is maintained. In Bankrate.com’s survey, the national average balance required for interest-bearing accounts was $2,257.82, and a number of accounts require $5,000 balance. Nationally non-interest bearing accounts require an average $245.37 balance to avoid fees. DCU Dividend Checking requires a $2500 minimum balance, but DCU Free Checking has no monthly fees or required minimum balances.

What are the ATM fees for the account? Most checking accounts charge surcharges for using ATMs that are not branded with the financial institution’s logo. These surcharges range from $0.50 to $2.00, with $1.50 most common. The institution whose machine you use also tacks on a charge. Consider how and where you use ATMs and then look at the checking account ATM fees before you choose a checking account. With a Loyalty Checking relationship, a member gets unlimited free ATM transactions at all ATMs and up to $5 reimbursement for surcharges from non-DCU ATMs. With DCU Free Checking a member gets unlimited free ATM transactions at all DCU ATMs and 4 free withdrawals a month from non-DCU ATMs. Balance inquiries and additional withdrawals are $1 each. These links provide a list of DCU ATMs and a list of no-surcharge ATMs.

How does the account handle “bounced checks”? These fees, which range up to $35 and average $25.80 according the Bankrate.com’s survey, are a real money maker for many financial institutions. Some institutions also add a daily fee until the account is brought into balance. Your best choice is to set up standard overdraft protection. DCU offers several overdraft protection options.

How high is the minimum deposit to open a checking account? Maybe some advertised checking account offer looks interesting, but before you leap ask what’s the minimum required to open an account. Nationally, the required minimum to open an interest-bearing account is just under $500, to open a non-interest account requires about $60. There isn’t a minimum required to open a DCU Free Checking account.

Picking the right checking account can provide not only the services you need, but also save you money. So always take time to compare all the costs of any offer.

Check out all the checking options offered by DCU. Also read the StreetWise Guide to Using a Checking Account.

If you find this review helpful, please pass the word to your friends. Also email me with any comments or suggestions.

Digital Federal Credit Union
220 Donald Lynch Boulevard
PO Box 9130
Marlborough, MA 01752-9130
508.263.6700 • 800.328.8797