Fees for standard checking accounts
Checking accounts, like most financial products, frequently carry fees. Here are two of the most prevalent (along with tips on how to avoid them):
Monthly service fee: Many checking accounts, particularly those from central banks, impose a monthly service fee of up to $15 to keep your account. If you meet specific requirements, such as maintaining a minimum level or setting up a direct deposit, you may be able to avoid paying the monthly charge. There are also no-fee checking accounts with no monthly fees.
Overdraft fee: If you spend more than the amount in your account, you may be charged an overdraft fee of up to $30. Overdraft protection, which will deny transactions bigger than your checking account balance or transfer extra funds from a linked savings account, will help you avoid this.
Savings vs. checking accounts
While checking and savings accounts are both bank accounts, they serve different functions and allow for various actions. Here are some important distinctions:
Checking accounts include a debit card. You can withdraw funds from your checking account using the debit card you receive. Savings accounts do not come with a debit card, but if your account is connected to a checking account at the same bank, you may be able to use one to access cash.
Checking accounts frequently allow for free withdrawals. Compared to savings accounts, which are limited to six withdrawals per month by law, this gives you more control over when you can access your money.
Checking accounts have lower interest rates. Because checking accounts have modest interest rates averaging.04%, it is preferable to place substantial sums of money in savings accounts with interest rates of 1% or higher.