Checking accounts are an essential part of the banking system. These deposit accounts give consumers a place to deposit their money, make transfers, write checks, pay bills, and do other routine banking transactions. The money in checking accounts is safe, as accounts are insured for up to $250,000 per depositor by the Federal Deposit Insurance Corporation (FDIC). However, with so many different options available, how do you know which account is correct for you?
KEY TAKEAWAYS
- Checking accounts are an essential part of the banking system, giving consumers a place to do routine banking transactions.
- Before you open a checking account, you should know your options and consider things such as monthly balances, fees, interest, and convenience.
- Regular checking accounts are the most common, giving you all the features you’d expect from a checking account.
- Premium accounts offer many perks but often require you to keep high balances.
- Free checking accounts may not come with a monthly service charge, but they still incur fees for other services, such as overdrafts or out-of-network ATM usage.
Know Your Situation
Before you open a checking account, you should know your options. After all, not all checking accounts are created alike. The same applies to your financial situation—it’s unique to you, so your checking account should complement it. Here are a few things you’ll need to think about before you head into the bank to open up your account.
Monthly Balance
How much you plan on keeping on average every month will help you decide which type of checking account to open up. Will this balance be consistent throughout the lifetime of the report? Or will you only have a significant credit at certain times during the year? Some accounts come with minimum balance requirements—which justify some of their perks—so you should keep that in mind.
Fees
Consider the fees associated with each type of account. You can avoid monthly service charges if you maintain a certain balance every month. Check to see if an account you’re interested in charges extra for things such as debit transactions and in-branch transactions. Maybe you can avoid specific fees by having automatic payments deducted for bills from your account or by setting up direct deposits. Knowing about the bank and its fee structures for each account can mean the difference between saving a lot of money or spending hundreds of unnecessary dollars in fees each year.
Interest
Although you may not collect much, some checking accounts do pay interest. If you want to earn a little more—remember, that’s a little more—you can find a bank that gives you interest along with a place from which you can do your everyday banking. Interest is generally calculated daily and deposited directly into the checking account at the end of each month.
Convenience
If you’re the kind of person who prefers personal interaction, you’ll probably want a checking account at a bank that has a lot of branches. However, if you can do without, you’ll fare well with an online bank. These institutions don’t have very many brick-and-mortar locations—some don’t have any at all—but they offer the convenience of online and mobile banking with a debit card. Because they don’t provide teller service, many of these banks allow you to use different banks’ automated teller machines (ATMs), making cash withdrawals easier and cheaper.
Now that we’ve outlined some of the primary considerations that go into choosing a checking account, here’s a list of some of the different types offered by most banks.
Regular Checking Accounts
A regular checking account simply lets you make all the things you’d expect from a checking account: deposit and withdraw money from an ATM, write checks, pay bills, and make purchases using a debit card. You may have to pay a monthly fee for the privilege of being an account holder, but many banks waive the price if you keep enough money in your account.
A regular checking account usually pays little or no interest on your balance. So if you’re looking for a bit of income, you may consider opening up a companion savings account to your checking account.
Premium Checking Accounts
If you have a five-figure sum or more to keep in a checking account, a premium checking account may be correct for you. Having that high balance in your account should allow you to avoid paying a monthly fee and provide perks such as ATM fee reimbursements, free checks, and earning a little bit of interest. You may also receive discounts on other services from the bank, such as a slightly lower mortgage interest rate or free financial advice. Still, that doesn’t mean a premium checking account is your best option, even if you can quickly meet the minimum balance requirement.
The extra perks sound great, but other options could work out even better. For example, you may earn a higher return on your excess cash while still keeping it accessible for emergencies by putting it in a money market account, government bonds, or a certificate of deposit (CD). Most people only need to keep high balances in their checking accounts if they have large, regular outflows, such as a high mortgage payment, large student loan payment, estimated tax payments, and hefty insurance premiums. As for the discounted services and free advice, you may get a better service rate or better advice from another institution.
A premium checking account may not be your best option, even if you can quickly meet the minimum balance requirement.
Interest-Bearing Checking Accounts
Interest-bearing checking accounts give you a small return every month for the balance in your account. Some stores pay a flat interest rate regardless of your credit, while others spend more on higher ratios. The interest rate will almost certainly be below the inflation rate. Still, it might be comparable to what some savings accounts pay, giving you the best of both worlds—unlimited transactions and monthly interest payments—in a single charge. However, you may not come out ahead with an interest-bearing checking account if its fees are too high. You may be better off with a free checking account, even if it pays less or no interest.
Free Checking Accounts
Free checking means that the account doesn’t charge a recurring fee, such as a monthly maintenance fee, and doesn’t have a minimum balance requirement to avoid a fee. Nevertheless, that doesn’t mean that every single service associated with the checking account will be free. You may still have to pay for other services, including out-of-network ATM fees, check fees, overdraft fees, stop payment fees, and foreign transaction fees. These accounts may not pay any interest, as you’re already getting the benefit of not paying a monthly fee. That said, some free checking accounts do pay interest.
Low-Balance Checking Accounts
Low-balance checking accounts, sometimes called “lifeline accounts,” are for customers who can only maintain a small balance but want to receive banking services. In exchange for allowing you to keep an account with a very low or no minimum balance requirement, the bank may require you to do other things that save it money, such as writing only a limited number of checks each month and receiving monthly statements electronically instead of by mail. Some of these accounts may not even have check-writing privileges—permitting only online or debit-card payments—and may not allow overdrafts. Rather than let you go below a $0 balance, they will decline any transaction that exceeds your available balance.
Second-Chance Checking Accounts
If a bank has closed your checking account in the past because of an unpaid negative balance and you’re ready to start over, a second-chance checking account may give you that opportunity. In exchange, you may have to pay a monthly fee of up to $20, and your account may have restrictions that other checking accounts don’t have, such as not allowing overdrafts. These accounts are available in all 50 states through banks and credit unions. Once you’ve maintained your account in good standing for a certain period—perhaps a year—you may become eligible for a regular checking account.
How will a bank know if you’ve had a checking account closed in the past? Just as credit card issuers look at your credit report before letting you open an account, banks look at ChexSystems and Early Warning Services reports before opening an account if banks deny your checking account applications and don’t know why order copies of your bank credit reports and review them for errors.
The Bottom Line
Whatever your financial situation, there’s a checking account for you—as long as you don’t have a history of fraud and meet basic account-opening requirements such as proof of identity. If you’re looking for a specific feature, such as an account for someone who always has a low balance or a store that pays interest, start by looking for versions marketed explicitly toward people with those requirements.
Always keep in mind that checking account names are just marketing labels. A free checking account might serve you just as well as a low-balance checking account, and an interest-bearing checking account may pay more than a premium checking account. Changing checking accounts is a time-consuming chore, so choose carefully and try to get an account you’ll be happy with for years. In the case of a second-chance account, choose a bank to see yourself staying within the long term.
10 Checking Accounts the Ultra-Rich Use
A checking account is a necessity for most people, but they’re not one-size-fits-all. Ultra-high-net-worth individuals need checking accounts that are equipped to meet their unique wealth management needs.
Many high-net-worth individuals choose to conduct their banking at the same institutions that average consumers frequent. To meet the needs of this clientele group, these banks have created accounts that come with special perquisites for the ultra-rich, such as personal bankers, waived fees, and the option of placing trades.
Key Takeaways
- Ultra-high-net-worth individuals need checking accounts that are equipped to meet their unique wealth management needs.
- Bank of America, Citibank, Union Bank, and HSBC, among others, have created accounts that come with special perquisites for the ultra-rich, such as personal bankers, waived fees, and the option of placing trades.
These ten checking accounts are designed with the wealthy in mind and are intended for banking clients who desire convenient access to cash with premium benefits.
1. Bank of America Private Bank
Private Bank is the private banking division of Bank of America, and it targets individuals with a minimum of $3 million in liquid assets. The Wealth Management Interest checking account is geared toward high-net-worth individuals who want to earn a competitive rate on their balance.
There are no monthly maintenance fees, and members are eligible to enrol in the Preferred Rewards program, which offers exclusive benefits such as a 75% bonus on rewards earned with a Bank of America credit card.
2. Citigold Private Client
The Citigold Private Client Account Package is an all-in-one banking product designed to simplify cash management for wealthy clients. The package includes access to Citibank checking, savings, and money market accounts. Account-holders also receive personalised guidance from a wealth professional, and many of Citibank’s typical banking service fees are waived for Private Client members.
3. Union Bank Private Advantage Checking Account
The Union Bank Private Advantage checking account is available to clients who maintain a combined minimum monthly balance of $250,000 in their checking, savings, investment, or retirement accounts. This account is free of monthly service fees. There are also no overdraft fees and no ATM fees worldwide.
4. HSBC Premier Checking
To qualify for the HSBC Premier Checking account, you must maintain at least $100,000 in combined investment and deposit balances with the bank.
Premier Checking comes with several built-in benefits, including the ability to earn bonuses of up to $2,000 each year when you refer someone for a new HSBC account. Clients also enjoy personalised financial support, discounts on loan products, and a range of other complimentary services.
5. Morgan Stanley Active Assets Account
The Morgan Stanley Active Assets Account provides the usual check-writing and bill payment services, along with the opportunity to execute trades with margin privileges.
Automatic cash sweep is another valuable feature; you’ll need a $5 million minimum initial investment to sweep into an Active Assets Institutional Money Trust.
6. UBS Resource Management Account
UBS is one of the world’s largest private banks, with $1 trillion in assets under management as of April 2021. The UBS Resource Management Account provides a fluid way to manage your cash and investments. There is no maintenance fee on minimum monthly balances of $75,000. Banking clients always have access to a UBS financial advisor who can assist with all financial decisions.
7. BB&T Wealth Vantage Checking
BB&T’s wealth management division offers an impressive range of products and services. The BB&T Vantage Checking account provides perks such as tiered interest checking, fee discounts, and preferred rates on loans.
If you’d like more flexibility, you can also open a Vantage Asset Management brokerage account, which allows for easy sweeping into and out of your checking account.
8. PNC Performance Select
The PNC Performance Select checking account comes with enhanced benefits, such as a personal private banker, the ability to earn interest on your balance, and bonus rates on selected CD and IRA products, in addition to fee waivers and discounts on consumer loan products, including home equity lines. There is a $25 account maintenance fee, which is avoidable if you maintain a minimum monthly balance of $25,000.
9. BNY Mellon Client Access
The BNY Mellon Client Access account is a self-directed banking product that combines the functionality of a brokerage account with the features of a checking version. Clients have the option of placing trade orders for stocks and mutual funds, paying bills, and overseeing their general day-to-day finances. This account and BNY Mellon’s other wealth management products are appropriate for consumers with $2 million or more in investable assets.
10. Chase Private Client
Chase Private Client is designed for individuals who maintain a minimum daily balance of at least $250,000 in a combination of linked checking, savings, or investment accounts at Chase Bank. There’s no monthly service fee, and only a $100 deposit is required to open an account. Account extras include higher interest rates on linked savings accounts and CDs, as well as fee waivers on selected services, including wire transfers and foreign ATM withdrawals.