Knowing what questions to ask when opening a bank account will reduce your chances of being hit with fees and penalties. Otherwise, going in blindly often results in wasted money (that you worked hard for!) and a lack of trust with your financial institution. So get your pen and paper ready and go in confidently with these 12 questions. You’ll feel so much more at ease once you do.
1. Is there a minimum balance requirement on a checking account.
Banks often have tiered checking accounts where the minimum balance requirement increases but typically, so do the perks. Watch out though because if there is a minimum balance requirement, going below may result in an unwanted fee.
2. Is there a monthly maintenance fee? If so, can it be avoided?
This question correlates with the first one as maintenance fees are (usually) tied in with a balance requirement. Other ways to avoid a monthly maintenance fee could be a minimum amount of direct deposit or performing a certain number of debit card transactions each month.
3. Are there ATM (Automatic Teller Machine) fees?
If you travel a lot and use a small town bank, chances are there isn’t going to be one in the next state over. Find out if you’ll be charged for using other banks ATM’s. If you are, you’ll most likely get hit twice, once from your bank and once from the other bank.
The good news? Depending on what tier of checking account you qualify for, you may be eligible for a refund.
At my bank, if I use a foreign ATM, not only will my bank not charge me, they’ll also refund the other bank’s fee up to $2.00.
QUESTIONS TO ASK WHEN OPENING A BANK ACCOUNT
4. What options do you have for Overdraft Protection?
Overdraft (when you’re account goes negative) fees can be ridiculously expensive.
For example, my bank’s overdraft fees are $37.50 per item. That means if I have five different transactions take my account negative further and further, my total fee would be $187.50! In my neck of the woods, overdrawing your account usually mean things are pretty tight as it is so nearly $200 in fees is not welcome, pain in the buttocks. No thanks!
Thankfully, there are ways to avoid such nuisance fees.
Examples of overdraft protection include:
- Linking a savings account to your checking account. This means if your checking account goes into the negative, the amount needed to get it back to zero will be transferred from your savings account. Unfortunately, fees may still be involved, but it’s likely not as severe.
- An Overdraft Line of Credit. This type of overdraft protection is revolving, meaning you can use it and pay it back over and over again. Typically, there is a pretty high-interest rate involved though, so be sure to ask about that too.
- A Credit Card. Most financial institutions offer their own Retail Credit Card, and as a perk for signing up, you can link it to your checking account as overdraft protection. Make sure you’re asking about transfer fees and interest rates though, to avoid being blindsided.
As far as questions to ask when opening a bank account, this one ranks pretty high for me as it has the potential to cause the most damage. This is debatable I suppose, but for me, it’s important.
5. As a new customer, is there an additional hold on funds for checks deposited?
Ah… funds availability. As a former personal banker, I made sure that every new customer that came through my office was very clear on this policy. I’m not kidding like; I nearly had them reciting the fund’s availability disclosure from memory before they left.
Why? Federal regulations, as well as your bank’s own funds availability policy, dictate how long it will be until you can access your money and new bank customers can have an extended hold.
Imagine the horror when someone deposits their paycheck on a Friday night, then starts paying bills with their debit card, only to find out they’re overdrawing their account.
If the customer is aware of the availability policy, those situations are avoidable.
6. Will my debit card be declined if I’m about to overdraw my checking account?
Most banks (if not all) offer something called overdraft election.
Overdraft election means you get to choose to have your debit card transaction declined if you don’t have the available funds or to proceed and pay the NSF (non-sufficient funds fee).
Obviously, you would need to take into consideration whether or not you have overdraft protection in place. If you do, weigh the pros and cons and proceed accordingly. If you don’t have overdraft protection, I’d elect to have the card declined rather than get hit with those absurd fees.
I’m confident you’re leaving today knowing what questions to ask when opening a bank account. You now possess the tools and knowledge to start a beautiful relationship with your financial institution, one based on trust and knowledge.
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