If you use a checking account for the majority of your spending, then you might be wondering what the best features are for this kind of product. Some people are used to paying fees for their checking account in a way similar to the fees you’d usually see on a credit card.
Others might hear this and react with shock. Why would you pay anything for a checking account? Today we’ll answer the question “should you be paying anything for a checking account?”
Checking Accounts vs Credit Cards
If you prefer to use a debit card to make your purchases, there are a lot of reasons you should favor a checking account. One of them, believe it or not, is ostensibly the lack of fees. Credit cards usually have annual fees that you have to pay, on top of the interest you’ll pay on the credit you take out if you let a credit balance float for more than a month.
As such, the short answer to our question is “no,” you should not be paying anything for a checking account. Even a reward checking account with an annual fee is often a bad deal. That’s not to say there aren’t checking accounts with fees associated, but it is to say that you should be avoiding those accounts.
Free Checking Accounts
Free checking accounts are plentiful, and they’re great for most uses. If you just need a way to store your money and you’re not looking to get any rewards or cashback, then a no-fee, small minimum balance account could be ideal for your situation. Just having somewhere for your direct deposits to go and an account you can pay bills out of is enough for some people.
On the other hand, if you’re more interested in rewards checking accounts, you might need to be ready for a higher minimum balance.
Reward Checking Account
Those who choose to use debit cards instead of credit cards so they can avoid debt could consider a reward checking account instead of a free account. These types of accounts usually offer either interest on your balance or cashback on your purchases. Essentially, these act like rewards credit cards without the fees, using the money you already have instead of spending on credit.
Just remember, if you’re trying to build your credit, a credit card is a great way to get reports on your on-time payments. No matter which way you go, make sure you do plenty of research into the exact product you’re signing up for! Always read the fine print and read online reviews of the product in question.