What would be the three most important factors that you would consider when deciding which depository institution fits your needs explain?

Written by: Henry Molina Lafayette Federal Credit Union Vice President, Business Development

A checking account provides a safe place to deposit funds and easily access the money you use for monthly expenses. Like many financial products in the marketplace, there are many options to choose from. To determine the right checking account to meet your needs, consider the following seven important factors:

• Insurance
• Brick-and-mortar vs. online banking
• Minimum balance and deposit requirements
• Fees
• Access to ATMs
• Interest rates
• Mobile apps

To choose the right checking account, it’s important to know how these factors will impact you based on your financial habits and plans for the account. The ways you use a checking account will determine which features are a higher priority for you.

For instance, individuals who keep a high balance in their checking account might prioritize interest rates above features like overdraft protection. Conversely, those who have a hard time tracking their balance and/or may find themselves spending beyond their available funds, a no-fee account might take precedence. Matching a checking account to your spending behaviors and financial needs will allow you to make the most of your money.

7 Factors to Consider

A checking account is an account through your credit union, bank, or financial institution that allows you to deposit and withdraw money. Unlike savings accounts, there typically aren’t limits on the number of withdrawals you can make. This makes a checking account ideal for paying bills, making everyday purchases, and withdrawing cash.

Most checking accounts offer lower interest rates on account balances - so you may not earn much on the money in your account. However, with some research, you can find a checking account with a competitive rate, such as Lafayette Federal’s 2.02% APY Checking AccountOpens in New Window (APY = Annual Percentage Yield).

Checking accounts make accessing your money simple. There are many ways to access, spend, and deposit money into your account; for instance, most checking accounts come with a debit or ATM card (and checks if desired). Depending on your financial institution, you can typically access your checking account through the institution’s online banking site or mobile app.

Insurance

Whether through a credit union, bank, or online institution, you should choose an account at an institution that is federally insured. A credit union should be insured by the National Credit Union Administration (NCUA)Opens in New Window. If you’re considering a checking account through a brick-and-mortar bank or online bank, it should be insured by the Federal Deposit Insurance Corporation (FDIC).

The FDIC and NCUA are independent government agencies that insure deposit accounts at eligible financial institutions. In the event that the bank or credit union were to fail, the government would reimburse all account holders for the funds they had deposited up to $250,000.

Keep in mind—it is rare to find a bank or credit union that is not federally insured. However, you don’t want to risk opening a checking account at an institution that isn’t insured. Most banks and credit unions make it clear that they’re insured on their websites and on posted signs at physical branch locations. If you’re unsure, ask a representative for documentation.

Brick-And-Mortar vs. Online Banking

For individuals who prefer to primarily manage their money digitally, you would probably want to consider an institution that offers easy online and/or mobile access to your account. However, if you prefer to walk into a bank or credit union in your local area to conduct your business, brick-and-mortar banks and credit unions allow you to speak face-to-face with bank representatives and physically withdraw or deposit funds.

Nowadays, many brick-and-mortar institutions do offer online banking features for their customers to use in conjunction with in-person banking. This provides customers with the personal touch of physical banking, alongside the convenience of conducting online banking transactions.

Minimum Balance and Deposit Requirements

Some checking accounts have a minimum balance and/or deposit requirement. Oftentimes, you can still maintain a checking account without meeting the minimum deposit requirement, but you may be assessed a monthly maintenance fee. The minimum deposit requirement varies by institution.

At Lafayette Federal, we offer checking accounts Opens in New Windowthat don’t require a minimum balance or a monthly maintenance fee.

Other institutions may charge a monthly maintenance fee of around $13.95 per monthOpens in New Window. To get this fee waived, you may be required to maintain a minimum balance ranging from $100 to $500 or more, depending on the institution and type of account. Because the type and amount of the minimum balance varies, make sure you understand the requirements at any financial institution you’re considering.

Similar to a minimum balance, a minimum deposit requirement may also allow you to avoid a monthly maintenance fee. This typically means that you will need to set up a recurring monthly direct deposit into your checking account (which may also be subject to a minimum requirement). Your direct deposit can come from an employer, employer pension, or other agency, such as the Social Security Administration.

Direct deposits are easy to set up through online banking, a service most financial institutions offer today. Not only will setting up direct deposit likely eliminate fees, but it will also remove the hassle of having to physically deposit checks (via mobile deposit). If you meet one or the other of these two requirements, it’s common for monthly maintenance fees to be waived.

Fees

It’s important to understand all of the fees associated with a checking account. Monthly maintenance fees are just one of many types of fees associated with checking accounts. Other fees may include overdraft fees, non-sufficient funds (NSF) fees, foreign transaction fees, and ATM fees.

The amounts of specific fees will vary from one institution to another, and even among different account options within the same institution. Choosing an account with a fee structure that suits your financial habits can save you money. Decide which fees pose the greatest risk and choose a checking account that offers protections from those fees or eliminates them altogether.

ATM Availability

Access to ATMs is a consideration that’s more important for some people than others. As all aspects of life have evolved digitally, there are more consumers today that seldom, or even never, carry cash. But for individuals who still prefer to use cash for day-to-day purchases or for those who prefer this way of making deposits, ATM availability is an important factor to consider when choosing the right checking account.

Using the ATM network associated with your financial institution should not cost you anything. Out-of-network ATMs, however, often come with a fee. If you are someone who frequently visits an ATM, make sure the ATM network for your banking institution is convenient for you. If it isn’t, find out what fee you will pay if you use an ATM outside of the network. Some institutions may offer a reimbursement for ATM fees charged by an out-of-network provider.

Interest Rates

While checking accounts are sometimes not the first line of choice for those seeking a significant return on your money, it’s still worth considering interest rates when choosing the right account for you. Because money is held in a checking account for short periods of time, these types of accounts can have lower interest rates.

On average, interest-bearing checking accounts provide an APY of 0.04%Opens in New Window for physical banks and credit unions and 0.31% for online-only banks. High-yield checking accounts may offer a tiered APY. A tiered APY model may allow you to earn higher rates up to a certain balance, then a standard rate for any funds beyond that.

For 2022, Lafayette Federal is offering an amazing 2.02% APY bonusOpens in New Window on all Personal Checking Accounts for new and existing members on balances up to $25,000. This is a great opportunity to earn more on your checking account balances, while also taking advantage of our member benefits and personalized service.

Mobile Apps

Many banks—both brick-and-mortar and online—now offer mobile apps for convenient banking on the go. After downloading the app to your smartphone or tablet, you can transfer funds, pay bills, check balances, and sync to financial management tools (like budgeting apps) straight from your device.

Mobile apps are password protected or can be set up to open with your fingerprint, making them as safe an option as other online tools. Being able to access all of your financial information with the tap of a finger makes staying on top of your finances a breeze. If mobile banking is important to you, ensure the financial institution you’re considering offers a mobile app.

Learn More About Checking Accounts at Lafayette Federal

At Lafayette Federal Credit Union, we offer checking accounts with no minimum balance or monthly fees, plus additional benefits and services with our Relationship Checking program.

For 2022, we’re also offering an amazing 2.02% APY bonus on all Personal Checking Accounts (for new and existing members) on balances up to $25,000. You won’t want to miss out on this amazing opportunity to earn more on your checking account balances, while also taking advantage of our member benefits and personalized service.

Not a Lafayette Federal member yet? You can become a member by completing an online membership applicationOpens in New Window.

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