Check Out Your Checking Account Options

You probably have a checking account or two, but chances are you haven't paid much attention to it recently.

Well, this might be a good time to re-examine your account to see whether it's really right for you. When considering your checking options, make sure you pay attention to the fees and other details in the fine print before you make your first deposit.

Look in particular for the following terms:

Monthly Maintenance

Very few institutions actually admit that they charge a flat fee for their checking accounts. However, a "maintenance" fee often lurks in the background. The fee is frequently on the order of $10 to $20, and is charged monthly unless certain criteria are met -- typically a required minimum balance.

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Check Card

This is the card that usually carries a Visa ( V) or MasterCard ( MA) logo and acts as a debit card. Read the fine print and the terms to make sure you aren't getting charged fees on it that you don't expect.

Required Minimum Balance

Many accounts require you to maintain a balance ranging from a few hundred dollars in noninterest-paying accounts to several thousand dollars in the case of high-yielding accounts. Drop below this minimum, and the bank may charge a fee or stop paying interest on the account.

But the cost of a minimum balance requirement isn't just in the fees -- consider the opportunity cost of leaving that money untouched for the years that you might hold that account.

While you may pat yourself on the back for having a free account, you've missed out on the returns that money could have earned if you had placed it in a higher yielding account.

(For example, say your bank requires a minimum balance of $750, but pays just 0.1% or even zero interest -- typical for an account with a relatively low minimum. If you moved those funds to a different account earning 3%, after three years you could have earned an extra $70.)

Not Sufficient Funds (NSF)

Many institutions offer overdraft protection as a courtesy, yet charge an NSF fee of $30 or so for every transaction you make once you've overdrawn your account.

If you are careful to monitor your balance, however, this is an easy fee to avoid. Even better, many banks allow you to link your checking and savings accounts to cover overdrafts.

Some institutions will even transfer money automatically from one account to the other, free of charge.

Limited Transactions

Accounts that tout themselves as "fee free" (i.e., no maintenance fees, no minimum required balance, etc.) sometimes limit the number of transactions you can make in a given month. You may be allowed only a certain number of checks or ATM withdrawals in a given month. If you exceed those limits, you'll be charged a couple dollars for each transaction over the limit.

In conclusion, when you choose a checking account, don't just go for one that says it's free, or for the one that offers the highest rate. Make sure you look closely at the fee and rate schedule to see if the account's features line up with your financial needs.
Peter McDougall is a freelance writer who lives in Freeport, Maine, with his wife and their dog.