BUSINESS
03/18/2010 05:12 am ET | Updated May 25, 2011

What To Look For In A Bank Account

By Vonda Sines, Associated Content

With so many alternatives, you need to know what to look for in a checking or savings account to find the best deal. Asking the right questions can quickly narrow your choices.

If opening a new bank account is on your to-do list, you have a dizzying range of accounts from which to choose. With so many alternatives, you need to know what to look for in a checking or savings account to find the best deal. Asking the right questions can quickly narrow your choices.

Fees

Most banks offer several types of free checking accounts. You'll want to ask about the fine print though. Is there a fee if your balance drops below a certain amount? How about charges if you use an ATM at a competitor's bank?

While banks try to bundle services into packages such as a checking and a savings account plus a safety deposit box thrown in, some of these so-called freebies might merely come with discounted fees. Does "free" mean you're required to use direct deposit? Are you limited in the number of checks you can write per month? Will the bank print your checks free? It's important to ask yourself whether the package or account offered will really work for you.

You'll also want to compare fees for services such as stop payments, wire transfers, cashier's checks, money orders and returned items. Electing to get a paper statement in the mail might cost you, too.

Interest

Who wouldn't want to earn interest on a free checking account? While this offer sounds tempting, sometimes the minimum balance required is so high, an interest-bearing checking account isn't worth it. Seemingly high interest rates on savings accounts might also require an astronomical minimum daily balance.

Convenience

Online banking fully meets the needs of some customers. Others want branches with convenient hours in their neighborhood or close to work. If telephone banking sounds appealing, ask which services are offered that way, and if there's a charge.

If you're interested in having bills automatically paid from your account, the American Bankers Association advises asking whether this convenient feature is available and what it costs. Also verify whether you'll get a debit card or an ATM card, and ask how direct deposit works. If you want overdraft protection on the account, find out your options. If you're interested in a joint account, ask what it takes to open one, and ask about the rights and obligations of each party.

Beyond Banks

The primary way banks strengthen their bottom line is by increasing service charges and varying interest rates. According to AARP, you might want to skip banks and consider opening an account at a credit union instead.

Most credit unions offer similar products and services as those available at banks, but with lower fees. Sometimes they impose no fees at all. This is because members actually own the credit union. All earnings come back to them as high dividends on savings and investment accounts, lower interest rates on loans, and reduced or absent fees on their services.

Accounts at federal and most state-chartered credit unions are insured by the National Credit Union Administration (NCUA).