Checking accounts tend to have lower interest rates than savings accounts. Savings or money market accounts typically have higher interest rates. Certain providers, typically online-only financial institutions, offer checking accounts with higher interest rates.
Fees can put an unnecessary dent in your pocket. Here are some to be aware of:. Monthly maintenance fees. Some providers will waive the fee if you meet certain criteria, such as keeping a minimum balance or setting up direct deposit. Read the fine print before opening an account. Take a look at the Best Free Checking Accounts. Overdraft fees. These are charged when you spend more than you have in your account and choose to enroll in a feature called overdraft protection.
Here's a sampling of accounts with a range of features. Here are some features to consider before opening a new checking account. Look for low or no fees and a low or no minimum balance. Check for a broad ATM network. See if the account has an interest rate. Most checking accounts have low or no interest, but you may find an account that offers a decent rate.
Keep an eye out for sign-up bonuses. Some providers will give you money for opening an account with them — here are the best bonuses this month. Only a handful of banks serve up free interest-bearing checking accounts with no strings attached.
However, if you have a longstanding favorable relationship with your bank, you might get the fee on your interest-bearing checking account waived. A checking account can affect your credit score and credit report under certain circumstances, but most basic checking account activities—such as making deposits and withdrawals and writing checks—do not have an impact. Unlike credit cards, closing dormant checking accounts in good standing also has no impact on your credit score or credit report.
And oversights that result in checking accounts being overdrawn do not appear on your credit report as long as you take care of them in a timely manner. Some banks do a soft inquiry , or pull, of your credit report to find out if you have a decent track record handling money before they offer you a checking account. Soft pulls have no impact on your credit score. Hard pulls reflect on your credit report for up to 12 months and may drop your credit score by as much as five points.
If you apply for checking account overdraft protection, the bank is likely to pull your credit since overdraft protection is a line of credit. If you fail to restore your account to a positive balance in a timely manner following an overdraft, you can expect the incident to be reported to the credit bureaus. If you don't have overdraft protection and you overdraw your checking account and fail to restore it to a positive balance in a timely manner, the bank may turn your account over to a collection agency.
In that case, that information also will be reported to the credit bureaus. There are agencies that keep track of and report your banking history. The official name of this report card on your bank accounts is "consumer banking report. The two consumer reporting agencies that track the vast majority of bank accounts in the United States are ChexSystems and Early Warning System.
When you apply for a new account , these agencies report whether you have ever bounced checks, refused to pay late fees, or had accounts closed due to mismanagement. Chronically bouncing checks, not paying overdraft fees, committing fraud, or having an account "closed for cause" can all result in a bank or credit union denying you a new account.
Under the Fair Credit Reporting Act FCRA , if your checking account was closed due to mismanagement, that information can appear in your consumer banking report for up to seven years. However, according to the American Bankers Association, most banks will not report you if you overdraw your account, provided you take care of it within a reasonable period. If there is nothing to report, that is good. It means you have been a model account-holder. If you haven't been a model account-holder, you can effectively be blacklisted from opening a checking account.
Your best course of action is to avoid problems before they happen. Monitor your checking account and make sure you check the balance on a regular basis to avoid overdraft charges and fees. When they occur, make sure you have sufficient funds to pay them, the sooner the better. If you are denied, ask the bank or credit union to reconsider. Sometimes the opportunity to speak with a bank officer is all it takes to get the institution to change its mind.
You can also try opening a savings account to build a relationship with the financial institution. Once you are able to get a checking account, it can be tied to this savings account to provide DIY overdraft protection. Under the FCRA, you have the right to ask the bank or credit union which of the two verification systems they use. If a problem is found, you will receive a disclosure notice, likely informing you that you will not be able to open an account and why.
At that time, you can request a free copy of the report that was the basis for your denial. Federal law allows you to request a free banking history report once per year per agency, at which time you can dispute incorrect information and ask that the record be corrected.
The reporting services also must tell you how to dispute inaccurate information. You can and should dispute incorrect information in your consumer banking report. It may seem obvious, but you should obtain your report, check it carefully, and make sure it is accurate. If it is not, follow procedures to get it corrected and notify the bank or credit union.
When you contact one of the reporting agencies, be aware that it may try to sell you other products. You are not obligated to buy them, and declining them should not affect the outcome of your dispute. You may be tempted to pay a company to "repair" your credit or checking account history.
But most credit repair companies are scams. Besides, if the negative information is accurate, the reporting services are not obligated to remove it for up to seven years. The only way it can be legitimately removed is if the bank or credit union that reported the information requests it. So, you might be better served to try to repair your relationship with the institution on your own. Some banks offer cash-only pre-paid card accounts for people who can't get traditional accounts.
After a period of good stewardship, you may qualify for a regular account. Many banks and credit unions offer other types of second-chance programs with restricted account access, higher bank fees, and in many cases, no debit card. If you are a candidate for a second-chance program, make sure the bank is insured by the FDIC. Here are some key differences:. After you've chosen a checking account, it's relatively simple to open.
You can sign up online or visit a local branch. You'll need to provide personal information, such as your name, address and birthday, plus your social security number. In some cases, the bank may run a credit check, but it will likely be a soft pull that doesn't hurt your credit. You can double check the terms before opening an account to verify this. Depending on the bank, you may be required to deposit money to open your account, which can be done by cash, check or online transfer.
This insurance protects and reimburses you up to your balance and the legal limit in the case your bank or credit union fails. Skip Navigation. Follow Select.
Our top picks of timely offers from our partners More details. A federal rule governs the maximum time your bank can wait before making deposited funds available to you, and that rule hasn't changed. That's why you need to know exactly how much money is available in your account at the moment you write a check. For example, money from a check you deposit on a Monday might not be available until the following week.
So, if you count on that deposit when you write a check on Tuesday to pay a bill, that check might bounce. Also, be sure that the available account balance you're counting on does not include funds from your bank's "overdraft protection" program.
It's possible that an account balance statement could include an overdraft protection amount, which could lead you to believe you have more money in your account than you really do. Remember, the way your check is processed will affect how quickly your check will clear and you have only limited ability to control the way your check is processed.
A check you write can be processed in several ways:. You probably will be able to tell how your check was processed, after the fact, by looking at your bank statement.
Your bank is required to list every EFT transaction in your monthly bank statement, including the dollar amount, the date the transaction cleared, and the name of the recipient. Electronic transactions may be grouped together, apart from your regular check transactions. If you receive a paper substitute check, you will be able to identify it by this statement: "This is a legal copy of your check. You can use it the same way you would use the original check. If a merchant wants to turn your paper check into an EFT, the merchant should give you notice that your payment will be processed that way.
There might be a sign at the cash register, or the cashier could inform you. Not usually. Check processing involves several parties-you, the person you're paying, that person's bank, and your bank. Each party has an interest in efficient, reliable check processing. Somewhere along the line, one of the parties might choose to process your payment electronically.
However, you can contact a party to whom you regularly mail checks, for example, the phone or credit card company, and tell them not to turn your paper checks into electronic ACH transactions. No law requires your bank to send you your cancelled checks. If you receive your checks or copies of checks, that's usually because of your customer agreement with your bank and your bank's policies.
Many consumers don't receive their checks or even copies of their checks. If you've usually received cancelled checks with your bank statement, you could start receiving substitute checks—the special paper copies created under the Check 21 Act—instead of, or in addition to, cancelled checks.
Even if you do not usually receive cancelled checks, you may ask your bank to provide you with copies of specific original checks, or the cancelled checks themselves.
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