Are you looking for a new bank account?
Banks are now vying for your business in a new way. They are advertising bank accounts that give you money in the account at start up or money in the account if you create a direct deposit program. New accounts have new features, too. One of my favorite features is the forced savings model, in which the bank rounds up your debit card purchases to the closest dollar and places the extra 30 or 40 cents into a savings account. The idea is that all of these small purchases add up and you can see the savings at the end of the year.
Are these incentives and niche market accounts really worth it? That depends how you use the account. If you’re paying a lot of banking fees every month, it may be time for an account renovation.
Your checking account is the one that many transactions come out of and into. These may be direct deposits, pre-authorized payments, cheques, debit transactions, or cash. This account likely sees a lot of activity, and it’s important to make sure that each action has as few charges as possible. If you find that you do a lot of transactions every month, it may be worthwhile to look into a set transaction fee that covers the number of transactions that you tend to do. If your account is not all that active, a fee per transaction is likely the way to go. Some banks waive transaction fees if you keep a minimum balance in the account, usually in the thousands.
If you are creating a savings account, many banks charge higher transaction fees for these. The idea is that you are supposed to deposit, not take out the money constantly. In reality, I use some of my savings accounts for shorter and medium-term savings goals, so I have a banking package to cover any transaction fees. I also have several savings accounts through ING, an online bank that charges no fees and have good interest. If you don’t mind the fact that it takes a few days to transfer money from your savings into your checking account, a no-fee online account is a good financial option.
In the end, saving money and storing money should not cost you a lot of that hard-earned money. If you find that you’re paying a lot of banking fees every month, meet with your banker to discuss other account options or look into other places you can keep your money. Under the couch is not recommended, though.