Everyone needs to open a checking account at some point in their lives. Usually, the sooner you do it, the better off you will be.
Can you believe that a friend of mine, who is 29, still does not have a checking account? She uses "check cashing" places (aka shady rip-off centers!) or goes directly to the bank where the check was issued to cash it... so if it's a Bank of America check, she walks into Bank of America. This strategy, obviously, does not work so well when a client pays her using a regional bank's checking account.
After calming myself down and promising to myself that I wouldn't verbally tear her head off, I explained that she needs to open a checking account. Like five years ago would have been nice, but better extremely late than never.
If you are in the same boat, and do not have the absolute financial bare bone necessities yet (a checking account, debit card, and high yield online savings account), here's what to look for:
1. Open a checking account with a sign-up bonus, if at all possible. We recently wrote about the Chase $100, $125, and $150 bonuses floating around. Chase is great, especially if you live in New York. SunTrust, which is great if you live in Florida, has a $150 bonus promotion when you open a new checking account with them (some conditions apply! for one thing, you have to use their bill pay service at least 3 times... presumably you have bills to pay, so this isn't a biggie.) Bank of America has a $100 promo to open a checking account if you haven't banked with them before.
2. Avoid fees like the plague. Make sure, if your newly opened checking account has a maintenance fee or "service" fee, that you have met some condition to waive the fee. For example, your fee may be waived if you keep an average daily balance of $1,500 or greater in the account, or if you use your debit card 5 times or more per month. Find out what your bank's conditions are and FOLLOW THEM. There is no reason to pay fees for a checking account, ever. If your bank keeps sticking you with fees, and it is impossible or too difficult to get the fee waived, open a checking account somewhere else.
3. Branch presence matters. Unlike an online high yield savings account, where I typically advise you just go for the bank with the highest rate (as long as it is FDIC-insured), with a primary personal checking account you want a bank with wide presence, both branches in your area and ATM machines.
This way, you won't have to trek across town to deposit a check or take cash out, or to speak with a teller about your account.
4. Hit yourself if you ever use a check cashing service again. Check cashing services are a total rip-off. Why pay someone else a large chunk of your hard-earned paycheck just for the privilege of getting that check cashed? A bank will do that for you, for free, if you have a checking account with them.
Don't open a checking account based on the interest rate, entirely. Most checking accounts have terrible interest rates, or none at all. That's fine: a checking account is for your daily expenses and living needs, it should not be an investment vehicle. If you want to save money, put it away in the high yield savings account or invest it. I only keep enough in my checking account to get by, typically $1,000 to $2,000 at a time. Anything above and beyond that amount... I try to sweep into my savings account as soon as possible, so it earns more for me.
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