What is a Checking account – Most widely used in USA as a checking account,but called a current account in other parts of the world,this long article definition will give you all the answers and the difference between various checking account bank fees compared below,as well as the difference between a checking account and a saving account,certificate term deposit.Also how a Credit Union Account and a Checking bank account are compared to a joint account and what are the advantages of it.
What is a Checking account
1.How it differs from savings account?
The primary difference between savings and checking accounts is that savings are bound by regulation D,which is a rule that states that the account holder can withdraw money a maximum of 6 times in a billing month.If the account holder exceeds this,there will be a penalty fee and if it happens excessively then the financial institution can convert the account to a checking account,in which there are no limitations to the number of withdrawals and transactions.
Other noticeable differences are yield rates and minimum balances, both of which lower/negligible for checking accounts.
2.What is the avg APY?
Since checking accounts are not meant to store money in, and are primarily used to make regular payments from,interest bearing checking account offer low APY,in the average of 0.2% APY, however there are a few high yield checking accounts that offer anywhere from 0.70% APY to 0.85%APY. These accounts require a higher amount of funds to be deposited, in the range of $50,000 to $100,000.
Below image showing the numbers at the bottom of the check from a checking account and its significance.
3.What are checking account promotions?
Also known as bank deals, these checking account promotions are bonus cash back offers,gift cards,freebies or airline reward miles/points given to new customers in order to attract them to signup for a new checking account.Most of these promotions require the new customer to setup a direct deposit,make a few purchases through the new account or use some feature of the checking account within a stipulated time in order to avail of the bonus.
5.What are Chexsystems?
Just like credit issuing companies rely on credit reports generated by credit bureaus to ascertain the credit worthiness before extending a line of credit to a particular individual,banking and financial institutions rely on 5 year reports of Chexsystems to get detailed banking information of a prospective customer before giving them access to a bank account.Information in the chexsystems can throw light on past failed transactions,ATM abuse,bounced checks or any other type of banking fraud that might be a risk to the bank.
6.Can i open another checking account if my current account is in chexsystms?
If for some reason,you were reported to the Chexsystems,then on record for 5 years,most banks will hesitate to do business with you.However some banks offer risk free second chance checking accounts especially for people with bad credit and those with a poor banking history.
7.Where can i find a checking account number on my check?
On the bottom of each check are three sets of numbers.The first set is the bank routing number,the second set of 8 digits is the checking account number, and last set of numbers is the check number.
8.What fees will i be paying for a checking account?
Most checking accounts do not have monthly maintenance fee and no minimum balances,however some require you to hold a certain average daily balance so that you can avoid the monthly fee.Other fees like Overdraft Fees,NSF stop payments are in the range of $30 to $35.
9.What free services can i expect with a checking account?
Almost all checking accounts come with a free debit cards,online banking,bill pay facilities,mobile banking,account alerts, and free access to all ATMs.
10.Are checking accounts insured by FDIC?
Non interest bearing checking accounts are insured upto $250,000 by the FDIC
11.Is there any relationship between my credit score and checking account?
None.Unless you have drawn a line of credit through your checking account.How and in what capacity you make payments through that checking will affect your credit score.checking accounts rely on chexsystems to monitor and evaluate bank account holders.
Checking account balances maintained by virtue of customer age and income
Open checking account online free
The New age of banking involves paperless transactions,instant cash and easy money transfer.Listed below are 3 banks where you can open checking account online free.
Everbank offers online checking accounts under its Yield Pledge checking scheme.As a show of good faith, they offer a $60 joining bonus.The minimum amount you can start off your checking account is a deposit of $1500.There are no ATM fees or any monthly account fees,and you can even try their Yield Pledge checking account service for 3 months,and if you aren’t happy with the service ,you can simply quit. Everbank will even give you $50 if you quit within this interim period. Everbank is the leading bank which offers online checking accounts,way ahead of competitors ING Direct and Bank of America.The image below shows the application page for Yield Pledge.To apply for this checking account,click the image below.
Ingdirect has an electronic or online free checking account called “Electric Orange” that starts APY at 0.2%.When you set this account up you will receive a free Mastercard ATM/Debit card,free online bill payment and free hard copy check postage.With this awesome powerful electronic checking account you can also transfer funds to another account online or make a secure deposit to the account.Click on the image below to apply now
Once you open an account at fndodirect.com, fill up the online application process and wait for the approval.Through Popmoney,a secure system, Online deposits can be done through electronic transfer of funds,and withdrawal can be availed through the atm access.Compared to other online accounts, fnbodirect offers 0.7% APY which is much more than other banks,if at all they do pay interest.By clicking on the Application page below,enter the account setup page.
Comparison of checking account fees
In our last post on Checking account promotions and bank deals we gave you a list of the best checking accounts to open in.However that was only the good part.All checking accounts come with fees that aren’t openly promoted for obvious reasons. All of us hate fees, it feels like are penalized and punished,but its a harsh reality and its the bad that comes with the great promos that are showered on us with.
Out of the various fees that we have to endure at some point of time, the most common (and useful) of these are stop payment,overdraft and non sufficient funds which have been tabulated below.The difference between Overdraft and Non sufficient funds are that the bank extends a line of overdraft credit to each customer depending on factors like account activity, value of deposit.This is a negative balance on your account and the bank could either give you that OD credit and pass a check/cash transaction (and charge you OD fees) or decline your transaction/check and charge you an NSF fee.
Comparison of checking account fees
BB & T
Bank of America
Avg Daily Balance-$500
Domestic Incoming $13.00
Domestic Outgoing $25.00
U.S. Currency $13.00
Foreign Currency No Fee
U.S. Currency $40.00
Foreign Currency $31.00
Overdraft Transfer (per transfer)$12.00
Monhtly fee-$0 otherwise $5
Daily Balance $1500
Cashier’s check $10 each
Cashed/Deposited returned item $12 per item – for items returned unpaid to Wells Fargo for any reason
Check Image Statements
$2 per month for copies of the front of your checks (10 checks per page)
$3.50 per month for copies of the front and back of your checks (5 checks per page)
Note: The fee is assessed every month, even if no checks are paid
against your account.
Check printing Varies
Excess activity fee $10 per item – when you have exceeded six transfers or withdrawals per month from your savings account per Regulation D requirements
International debit card purchase fee 3% of transaction amount
Money Order (up to $1,000) $5 each
Stop Payment $31 each
Wire Transfer $15 for incoming domestic/internal
$30 for outgoing domestic/internal
Access to Wells Fargo Online Bill Pay $6.95 per month (includes up to 25 payments per month)
Bank OF America
Essential Checking Account
Online and Mobile Bill Pay service, for each statement cycle during which you use the service to pay one or more bills – $4.00 Monthly Online Bill Pay fee
MyExpression Banking added to your debit card or checks, one-time fee — $25.00 Specialty Account Set-up fee
You may link additional Bank of America Essentials checking accounts to your primary account. Each additional linked Bank of America Essentials checking account – $5.00 Monthly Fee for an Additional Checking account
For each additional checking account, we do not waive the $5.00 Monthly Fee for Additional Checking account.
*The standard Overdraft Item Fee is $35. The standard NSF: Returned Item Fee of $35 applies if we return the item unpaid
$15 each international item
Account Closure (within 12 months of open date)
Continuous Overdraft Fee $50.00
Fee charged on sixth day (if account is negative after 5 consecutive days)
Daily fee charged thereafter (until account has a positive balance $15.00/$3.00
Overdraft Item Fee (maximum 6 per day) $33.00
Return Item Fee (maximum 6 per day)$33.00
Deposited Item Return (per item) $8.00
Initial Dormant Account fee $25.00
Monthly Dormant Account fee $10.00
Garnishment, levy, writ, subpoena and other information request including, but not limited to, information request from law enforcement and/or government agency (if applicable): $100.00
ATM or VISA Check Card Replacement $5.00
Cash Withdrawal (per transaction)$3.00
Balance Inquiries (per transaction)$2.00
International Service Fee (card transactions) 2% per transaction
Incoming wires $15.00
Tracers / Wire Research (per hour) $25.00
Copy Requests (per request) $5.00
Next Day Transfer Fee (per withdrawal) $10.00
Standard Transfer Fee $0.00
Next Day Delivery Fees $10.00
Research Fee (per hour with a $25.00 minimum) $25.00
Stop Payment Fee
Per Check, ACH, BillPay or Pre-Authorized Visa Debit Card Transaction$33.00
Per Renewal $33.00
Check Issuance Fee (per item) $5.00
Copy of Check/Statement:$3.00/item
Expedited mail service (not including Debit cards):$15.00
Debit expedited mail service:$25.00
Stop payment requests:$25.00
Outbound wire transfer (Fee only for outbound domestic wires, NOT including inbound):$20.00
Verification of deposit $25.00
Government Reclamations (ACH or Paper) $50.00
Legal Process (including, but not limited to, restraining notice, levy, court order, injunction, order of attachment or any type of subpoena) $50.00
The following fees may be assessed against your account and the following transaction limitations, if any, apply to your account:
Minimum Deposit Required to Open Account $1,500
Yield Pledge Checking Account monthly fee $0.00
Basic Checking Account. (Available through an EverBank Financial Center, and to NY residents*)
Minimum Deposit Required to Open Account .050
Residents of the State of NY .25
Monthly fee in any month when average daily balance is below $50.$5
Residents of the State of NY $0.00
Wire Funds into EverBank (foreign or domestic)$0.00
Wire Funds out of EverBank (foreign)
(In addition to fees charged by other financial institutions) .50
Wire Funds out of EverBank (domestic).$25
Returned Deposited $20
Monthly Service Fee $25
Monthly Service Fee $0 Monthly Service Fee when you have an average daily balance of $15,000 or more in a combination of qualifying linked deposit / investments
Chase ATM $0 for using a Chase ATM to complete any transaction.
Non-Chase ATM $0 for first 4 Inquiries, Transfers and Withdrawals each statement period at a non-Chase ATM in the U.S., plus any fees the ATM owner charges.
$2 for any Inquiries, Transfers and Withdrawals over 4, plus any fees the ATM owner charges.
Fees for using your account when you don’t have enough money in it or it’s already overdrawn
Insufficient Funds Fee $34 for each item we pay (maximum 3 Insufficient Funds and Returned Item fees per day).
Returned Item Fee $34 for each item we do not pay (maximum 3 Insufficient Funds and Returned Item fees per day).
Extended Overdraft Fee $15 is charged once after your account is overdrawn for 5 consecutive business days. You will be charged this fee even if your account is overdrawn by $5 or less.
Overdraft Protection Transfer Fee (If you are enrolled) $10 for each day when we transfer available funds through Overdraft Protection. However,
if your ending account balance is overdrawn by $5 or less before the transfer happens,there is no fee.
Replace lost Check Card
Deposited checks (and other items) returned unpaid and resubmitted to the paying bank
Deposited checks (and other items) returned unpaid and charged back to your account
Stop Payments (all items)
$15.00 per month
Account closing within 90 days
Check drawn on account
$20.00 per check
The following fees apply to overdrafts created by check, in person withdrawal, ATM withdrawal, or other electronic means as applicable:
NSF returned items charge
$34.00 per item $340.00 max per day
NSF paid items charge
$34.00 per item $340.00 max per day
IncredibleBank, a division of River Valley Bank
Overdraft Line of Credit. You pay interest if your balance drops below zero and you use your Overdraft Line of Credit. Unlike traditional banks, Electric Orange does not charge a fee to use your overdraft, and there’s no fee to sign up. If you use it, you will only pay interest on the amount you borrow.
Overnight Delivery of a Check. If you use our Overnight a Check service to send payments via overnight courier (for those instances when you need to send money for next bank business day delivery) the cost is $20. First-class Mail a Check delivery is free if you can wait a couple of days.
Overnight Delivery of a Replacement Card. If you request to have a replacement Electric Orange Card sent to you via overnight courier, the cost is $25. There is no charge for standard delivery of a replacement card.
Rejected Check. If a check is presented to us for payment and there aren’t enough funds in your account, there is a $9.00 Rejected Check Charge that will automatically be deducted from your Electric Orange.
Stop Payment. If we’re able to stop a paper payment at your request, there is a $25 stop payment charge.
Foreign Transaction. If you use your Card for a foreign transaction (any transaction made in a foreign currency or that MasterCard® classifies as a cross-border transaction), a charge of 2% of the foreign transaction amount will be applied. If it’s in a foreign currency, this will be based on the amount after it’s converted to U.S. Dollars by MasterCard. This is in addition to what MasterCard may charge as part of converting the purchase to U.S. Dollars. Please remember to notify us if you are travelling overseas.
ATM Replacement Card
Debit Card Replacement
Debit card purchase
$500.00 per day for
ATM and $1,000 per day
for point of sales
Debit Card Purchase Limits for Businesses
$5,000 for point of sale and $1,000 for ATM
Fee depends on style of check ordered
$1.00 per $100.00
Traveler’s Checks for Two
$1.50 per $100.00
$30.00 per item
The categories of transactions for which an overdraft fee may be imposed are those by any of the following means: check, in-person withdrawal, or other electronic means.
$30.00 per item
The categories of transactions for which an uncollected fee may be imposed are those by any of the following means: check, in-person withdrawal, or other electronic means.
Deposited checks returned unpaid
Account activity printout
$25.00 per hour, minimum 1 hour,
plus $.50 per copy
$25.00 per hour, minimum 1 hour
$10.00 per statement
Copy of Account Statement
Stop payment – Check
Stop payment – Electronic Fund Transfers
Stop payment – Money Order
Incoming Domestic Wire Fee
Outgoing Domestic Wire Transfer
$100.00 per subpoena
Account Inactivity Fee (Dormant Account)
$5.00 per month
Bond Coupon Envelope Fee
$15.00 per envelope
Returned Bond Coupon Fee
$25.00 per envelope
Foreign Draft Fee
Outgoing Foreign Wire Fee
Incoming Foreign Wire Fee
Canadian Check Collections Fee
$25.00 per check
Foreign Check CollectionsFee
$50.00 per check
$2.50 per item
Savings / Money Market Excess Debit Fee
$5.00 per item
How does a Savings Account differ from a Checking Account
Its all in the name. Savings accounts are used primarily my users to save money in. This may differ from checking accounts and certificate deposits which are also used to invest in banking institutions. Savings accounts can be positioned in the middle of checking accounts and certificate deposits as far as interest and other factors are concerned.
what is a a savings account used for
1.Have a lower interest rate than Certificate deposits, but higher than checking accounts.
2.Can be liquidated easily at any time without penalties .
3.Using a debit card, funds can easily be withdrawn conveniently
4.A Different type of savings account known as a share account is offered by credit unions are competitive rates.
5.Extremely easy to setup with most banks accepting a minimum balance amount of even $100
6.Health savings accounts are a type of savings account that is used to invest for future medical reimbursements without any Federal Taxes applicable.
7.Most savings accounted are protected by the FDIC, a body that insures bank deposits upto an amount of $250,000,so even in the unforeseen event of bank closure, the deposit is safe.
Savings account in Credit Unions
Most Credit Unions offer Share Accounts which are similar to Savings Accounts. These Share Accounts are so called because of the “cooperative” manner in which credit unions operate. The money pool of all the customers jointly held is then methodically distributed for loans among credit worthy members of the Union.Applying to a Credit Union is a simple process,and even a minimum deposit of $50 can get you started.
Share accounts can be regular saving or daily saving. Daily Savings accounts in Credit unions function in the same way as checking accounts do, and funds can be deposited and withdrawn on a frequent daily basis.
The main difference between a these two types of share accounts is the withdrawal policy. While regular share accounts allow you to withdraw funds from the account a maximum of six times in a calendar month, daily share accounts have no withdrawal limits.
Should you consider investing in a Certificate Deposit? – Advantages and benefits
One of the best and most widely used reason for investing in a CD is its security.No other investment method can provide the safety and security that a certificate of deposit can.Opening a Certificate of Deposit in a Nationalized bank will single handedly anchor your household economy.Certificate Deposits have the least amount of risk associated with them because their stature doesn’t change with market volatility and fluctuations.
A simple method of allowing your deposit to grow with time ,the longer the duration you chose to keep, the higher the interest accrued. Its always a good idea to choose to deposit in the bigger financial institutions as those have the greatest asset base, and the chances of them going bust are slim.
Moreover these large banks are backed by the government,so you’re assured protection even in the worst financial crisis.The downside to this is a lower rate of return on your investment as Certificate Deposits offer a very low APY.
Below is a list of banks with current APY, for Certificate Deposits of 1 year:
As seen from the above picture,its fairly easy to invest in a CD scheme.Most banks let you deposit a minimum of even $1000
Interest in Certificate Deposit schemes are calculated in Compund Interest,which means your Interst amount that accrues gets automatically deposited back into the same CD and ineterst now is calculated on this new principal amount.This is of great advantage to customers,as thier matured amount increases much more.Look at it as “interest on interest”.
Bank Joint Account
Bank joint account is offered by banking institutions wherein typically two people have access and ownership rights to funds in that account equally.
1.Each account holder will have access to funds in the account.
2.Each account holder will have the use of an ATM card for withdrawal.
3.Deposits via checkbooks,online banking and telephone banking can be availed by both account holders
4.It is possible to make deposits and withdrawals from the joint account with only one signatory on a check.
5.In the terms and conditions that are signed by both account holders,there is a clause stating that the bank has right to offset funds from another account owned by either account holder separately in order to replenish funds into the joint account in the event that funds in the joint account get depleted below the minimum balance limit.
When one of the account holders dies, the other joint account holder becomes the sole benefactor to claim those funds in the joint account.This may get complicated if the funds are substantial, as that can a financial burden of sorts for the surviving account holder with respect to higher taxes.
Pros and Cons
1.Most beneficial use of applying for a joint account is that the credit scores of both the account holders will be affected to a certain extent,in a good way or bad,depending on how their individual credit scores were before applying for the joint account and in what capacity they use a joint credit card account issued by the same bank.This could adversely affect one of the account holders with good credit standing if credit used on the account is not managed substantially well.
2.Being in a joint account can also get you legally bound or liable in the event that one of the individuals misses out on a payment or is in debt.This makes both the account holders equally responsible.
3.Joint accounts are good for like minded individuals to invest in together for a particular cause into a joint account for either business ventures or personal domestic projects.
Credit Union vs Bank Checking Account
Credit unions have for long been the banks poorer cousin.Here are a few aspects of that stand out when compared with traditional banking institutions.
Many say that credit unions are the way banks used to be, more interaction and less recorded messages. What banks lack nowadays is that personal touch, that money talk on a first name basis. One major factor that makes credit unions more personal is because they are much smaller organizations, so it’s easier for employees to keep in touch with customers in a more informal way.
Most are selective in bringing new members into the fold, that way each user gets a better and more enriched customer experience as they management can serve them more efficiently. One huge disadvantage of banks are the new telephonic recorded voice options that take a long time to reach a tele operator.
This infuriates the customer even more to a point that the irate customer threatens to close the account with the bank. However the banks also have larger network of outlets and most have a nationalized web of interconnected communications that can be accessed anywhere in the United States compared to the CU.
The customer service may be more impersonal when they deal with customers but are also more organized and systematic.
2.lower interest rates
One of the best reasons for shifting to a CU would be because of the drop in interest rates. Most banks that offer credit cards, charge interest in the range of more than 13%-20% depending on how good your credit score is, or how well you are at paying back your credit. Credit Unions on the other hand even for first time customers offer a straight interest cut in the range of 6%-8%.
Many long time customers of banks even with good credit history don’t get a reduction in their interest on small loans or even better yield on their certificate deposits, which is when they turn to credit unions as an alternative investment option.
The reason why a CU is more customer friendly is because it is a non profit organization. This gives a lower interest charges for loans, lesser penalties and fees for opening, closing ,late payments .Higher interest also other deposit schemes ,and easier migration from other banks checking accounts to credit unions.
Also most offer a zero balance transfer charge after which you pay a very nominal interest. This is good for people with high balances that have spiraled out of control and face heavy over-limit charges and penalties.