Here
is a quick look at the common types of checking accounts.
When you shop
around, however, keep in mind that banks may use different
-- and somewhat
fancy -- names for these accounts. - Basic checking
-- This account is for the customer who uses a checking
account for
little more than bill-paying and daily expenses, and
does not maintain
a high balance. Some basic accounts require direct
deposit or a low
minimum balance to avoid fees.
- Interest-bearing
-- Usually requires a minimum balance to open, with
an even higher balance
to maintain in order to avoid fees. For example, Bank
of America's
"Prima Checking" in the Los Angeles area
requires $100 to
open, but charges $22 in service fees each month if
you do not maintain
a $10,000 balance, according to a February survey by bankrate.com (sm).
BankAtlantic's "Interest Checking" in
the South Florida
area requires a minimum balance of $100, but charges
$14 a month if
the customer does not maintain $1,500 in the account.
With these accounts,
the higher your balance, the more interest you earn.
The average interest
rate paid on checking accounts is 1.52 percent, bankrate.com's
(sm)
weekly survey shows. Interest is paid monthly,
at the conclusion of your statement cycle.
- Joint checking
-- An account owned by two or more people, usually
sharing a household
and expenses. Each co-owner has equal access to the
account. Most types
of accounts, whether it's basic checking, savings or
money market, allow
for joint use.
- Express
-- Designed for people who prefer to bank by ATM, telephone
or personal
computer, this account usually boasts unlimited check
writing, low minimum
balance requirements, and low or no monthly fees. The
catch? Teller
fees as high as $3 a visit, or a flat monthly fee of
$8 or more for
teller visits. These accounts are especially popular
with students and
younger customers who are on the go and don't
want to spend a lot
of time on banking transactions. A 1998 survey by bankrate.com (sm)
found 70 express accounts at banks such as NationsBank,
Wells Fargo
and KeyBank, in the top 35 metropolitan markets in the country.
- Lifeline
-- These "no-frills" accounts for low-income
consumers are
typically products with monthly fees ranging from zero
to $6; require
a low, if any, minimum deposit and balance; and allot
a certain number
of checks per month. Many banks, thrifts and credit
unions offer such
accounts. Lifeline accounts are required by law in
Illinois, Massachusetts,
Minnesota, New Jersey, New York, Rhode Island and Vermont.
In those
states, minimum terms, fees and conditions are set
by law, not by individual
banks.
- Senior/student
checking
-- Many institutions offer special checking deals if
you
are a student or age 55 or over. The perks vary from
bank to bank, but
may include freebies on checks, cashiers and traveler's
checks,
ATM use, better rates on loans and credit cards, or
discounts on everything
from travel to prescriptions.
- Money
market
-- This account combines checking with savings and/or
investment opportunities
to help you pursue higher earnings. Requires high minimum
deposit to
open -- usually $1,000 to $10,000; higher balances
to maintain in order
to avoid fees; and has tighter limits on checking transactions
than
other accounts. Pays more interest than basic checking
or savings accounts.
According to a bankrate.com (sm)
survey, the average
interest on a MMA with a $10,000 balance is 3.45 percent,
with a 3.50
percent annual percentage yield. This account is for
people who can
afford to maintain a high balance and do not write
more than three to
five checks each month.
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