Everyday
Buying and Bill-paying
You have items to buy and bills to pay. What’s the right
account to get it all done? A checking account. Using checks
is inexpensive and much safer than carrying around a lot of
cash.
Checking accounts are important. If you pay your bills with
cash, it is difficult to provide creditors with a record of
how you manage your money. Having a checking account can help
solve this problem.
When you have a checking account at a bank or credit union,
you can use your monthly statement and canceled checks to show
creditors that you do a good job of paying your bills. In addition,
it usually costs less to have a checking account than it costs
to buy money orders to pay bills or to use a check-cashing
store to cash your paycheck.
If you don’t have a checking account, consider opening
one soon. Call several banks, savings and loans, or your credit
union. Ask what they charge and what services they provide.
Use the Checking Account Comparison Worksheet to compare the costs of checking
accounts. Consider the different types of checking accounts.
Some account options are:
- Basic checking account. This account works
best if you can’t keep a lot of money (called a minimum
balance) in the account on a daily basis. Most banks charge
a monthly fee for the account. Many credit unions offer free
checking if you open a savings account as well. A few banks
don’t charge a monthly fee on their basic checking
accounts.
- Interest-bearing checking account. You
earn a small amount of interest on the money you keep in
this account. To avoid a monthly fee, you’ll need to
keep a rather high balance in the account, usually around
$1,000.
- Express checking account. This account
works well for people who live a long distance from a bank
or would rather bank by automated teller machine (ATM), telephone,
or a computer. The monthly fees are likely to be low (around
$5 to $10 a month) and you usually can keep a low minimum
balance. The account cost is low because you’re not
visiting a teller. If you do visit the bank and use the teller,
you’ll pay a teller fee.
- "No-frills" checking account. These accounts usually are for low-income people. The monthly
cost is low (ranging from zero to under $10). Also, you can
keep a very low balance in the account. Typically, you can
write only a limited number of checks each month on this
type of account.
Once you decide where to open your checking account, the bank,
savings and loan, or credit union will most likely require one
or more of the following:
- A completed application
- A government-issued piece of identification
with your picture on it, such as a driver’s license
- Social Security Number (some may ask for
a copy of your card)
- A minimum deposit to open the account,
such as $25
- Some may require that you also open a
savings account and others may run a report on your credit
history
Savings accounts are important too. One of the best ways to
improve your overall financial picture is to save money every
month, even if it’s only a small amount. Read more about
opening a savings account
by clicking here.
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