checkbookThere are quite a few choices when it comes to choosing a checking account that meets your needs.

Checking accounts come in many flavors depending on what you want out of it. Some accounts sound attractive, because they have the word FREE attached to them. What about the restrictions? Do you want to earn interest on your checking account?

Many financial institutions tend to be order takers. In other words, they have these products, but they wait for you to tell them what you want. The problem is, you need to know what kind a checking account is best for you. A lot of banks tend to push the product they want you to have. The product that brings in the highest return for them, not necessarily the one that is best for your own situation. Let’s look at the differences in these types of accounts, so you can be prepared to choose the best checking account.

Free Checking – One of the more popular current choices in checking accounts, the free checking account can certainly have its benefits. You will typically pay for a box of checks, and that’s about it. Now, be careful. Some of these free checking accounts have limitations on the number of times you can come to the teller desk or call the bank. Shop around, because it’s easy to find a bank or credit union that will have easier restrictions or perhaps no restrictions at all. Most of these accounts don’t allow you to earn interest, however we’ve found that some credit union accounts do offer interest even on their basic checking account, and there are no fees for typical usage.

Advantage Checking / Interest Bearing Checking – These account require higher balances to earn interest and have penalty fees for dropping below a certain balance. Sometimes, however, they include free checks. If you write a lot of checks this might be a benefit to you. A typical amount for a minimum is about $2500. You earn a decent rate, but you may be better off with a money market if you don’t need to access the money more than 3 times a month. If you do need frequent access, then this type of account can be a good fit. Again, rates, fees and minimums vary by bank and credit union.

Senior Advantage Checking – Typically the same kind of benefits as Advantage Checking. You earn interest on your checking account and may or may not require you to keep an minimum balance. Some banks and credit unions don’t have fees associated with this account, so if you bank does, try shopping around..

Debit Card or Check Card – This should be considered a must have item with ANY checking account. A check card lets you make payments from your checking account without having to write checks. You can use it by entering a pin (debit transation) or you can sign for it like a credit card (credit transaction). You can pull extra cash at the point of sale if needed. All transactions draft directly from your checking account. If you are still writing checks when making purchases, you need to ask yourself why. As we continue to move to paperless transactions, written checks will become more and more rare. Even today the paper check is mostly unecessary. If you don’t have debit card, get one now. You won’t regret it. Now, that being said, a debit or check card should always be a free convenience with any checking account. If your bank or credit union charges for this, go somewhere else.

Overdraft Protection – Although this is not a checking account, but rather a loan, it’s worth mentioning in this section the benefits of having an account that provides overdraft protection. It’s usually a line of credit that will cover you if your balance on your checking account falls below zero. You don’t pay for it unless you use it, and even then there are accounts that charge you less or nothing at all to use it except for the interest you accrue. As far we’re concerned, this is a must-have type of account if you already have a checking account. If you don’t have overdraft protection, then you would end up paying some high fees for insufficient or nonsufficient funds when you use your checking account. There’s just no reason for that when you can easily avoid it. We go into the overdraft protection more, including fees, in the Loans section.