Choosing the Right Bank Account

Financial Plans

Before You Open an Account

Consider what you need or want from a bank account.

Think about your day-to-day life and how you like to handle your money.

  • Do you receive a fixed paycheck or pension on a regular basis or does your income vary?
  • How do you prefer to pay for purchases: cash, credit cards, debit cards, or checks?
  • Is one of your personal financial goals to set aside money regularly for savings?
  • Are you concerned about possible overdrafts and the fees you might incur?

Comparison shop.

Some bank accounts may have minimum balance requirements or monthly maintenance fees. Read the agreement from the bank that describes the account’s terms and conditions before making a final decision. You can review a bank’s account agreements online or by stopping by a branch. Looking at a legal document may appear intimidating or time-consuming, but many banks offer simplified disclosures and knowing how the account works is worth it to ensure that you understand all aspects of the account, including potential fees and when they may be assessed. That’s the best way to avoid surprises.

Managing an Account

Follow your transactions and balance your accounts.

Whatever method you choose, track every transaction so you can handle your money effectively and avoid spending more than you’re comfortable with. You can monitor your transactions using online services provided by your bank. There are also alerts that you can set up with your accounts to notify when your account balance drops below a specified level or when a check has cleared.

Understand how to avoid overdraft fees for withdrawing more than what is in your account.

Most banks offer overdraft programs that allow customers to make ATM withdrawals or perform certain debit card transactions that exceed the customer’s available balance. These overdraft transactions trigger fees per overdrawn item, but banks are only allowed to assess fees for paying an ATM or one-time debit card transaction if the customer has opted in to overdraft coverage. If you choose not to opt in, be aware that ATM and one-time debit card transactions that go over the amount of funds in your account will be declined.

Ask your bank if you can link your savings account to your checking account to cover transactions when you don’t have enough money in your checking account.

A bank may charge a fee for this automatic transfer service, but the fee is typically smaller than an overdraft fee. The easiest way to avoid overdraft charges is to keep a close eye on your account balance and on how much you plan to spend. Also, make sure you have enough in the account to cover any automatic payments you have set up.

Arrange for direct deposit of your pay and benefit checks.

With this feature, you don’t have to worry about finding time to make deposits yourself. Using the service may also help you with savings, as you can set up your direct deposit to have a certain amount from each check automatically sent to your savings account. If you have money in your checking account that you do not expect to use right away, moving it to a savings account or a certificate of deposit (for a set period of time) can be a good personal finance strategy for building short-term savings and earning more interest. Just be sure to check with your bank regarding any possible restrictions on transfers between accounts.

Help guard your accounts from theft and fraud.

  • Check your accounts regularly for suspicious transactions.
  • Protect your passwords and PINs.
  • Avoid clicking on links or responding to emails requesting personal information, such as Social Security and bank account numbers. In general, legitimate companies will never contact you unprompted requesting sensitive information.


Information taken from: the FDIC Consumer News Summer 2016 edition. To read more from this edition and more  please visit the FDIC website.