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Time
for a checking-account checkup
By Greg
McBride • Bankrate.com
See
the most recent version of the checking study.
Everywhere you look, corporate
America is cutting costs. Layoff announcements from such heavyweights
as Daimler-Chrysler, Motorola and Dell Computer are but a few of
the pervasive reductions of late. All of this is in the name of
cost reduction as corporate revenues, profits, and subsequently,
executive bonuses all decline.
The release of the semiannual Bankrate.com Checking
Account Pricing Study highlights how you as a consumer can embark
on a cost-reduction campaign of your own -- by evaluating your checking
account.
Is your checking account a "revenue enhancer,"
putting money in your pocket every month? Or is it a further drag
on your budget, hitting you with monthly service charges, per-check
charges and ATM fees? Even if your account is truly a "no-cost"
account, is there an opportunity cost involved because you have
to tie up several thousand dollars at a low yield just to avoid
those monthly fees?
As Bankrate.com has uncovered, alternatives
that are more efficient do exist. In fact, many of these alternatives
may be available without switching to a different bank. Most institutions
offer a range of accounts tailored to a different type of consumer.
If the current account is not giving you what
you need at the right price, see what other accounts the institution
offers. Keep in mind, one of the best options you may find is a
non-interest account that has no monthly fees and no per-check charges,
but no balance requirement either. Do not discount this entirely
just because it does not pay interest. Instead, remember that a
non-interest account gives you the flexibility to keep only what
you need to pay the routine monthly obligations. That lets you divert
excess funds into higher-yielding instruments, such as money market
accounts, without sacrificing the ability to access those funds.
How much have you paid in ATM fees over the
last six months? Look at your previous six months' statements, tally
the amounts in fees, and compare it to the total amount withdrawn.
You may be shocked how much you're paying for your own money.
Again, Bankrate.com's study points out the alternative:
Opt for cash back when using an ATM or debit card at merchants,
such as supermarkets and convenience stores. Many of the same institutions
that charge $1.50 per transaction to use another bank's ATM, plus
the $1.50 you typically pay the ATM owner, permit you to access
your cash from the point-of-sale terminal free of charge. This strategy
is particularly effective when traveling, and eliminates the late-night
drive in the rental car through unfamiliar territory searching for
a network ATM.
If your checking account qualifies as a liability
instead of an asset, it may be time for some restructuring. Ask
your bank what other accounts it offers that better meet your needs.
Alternatives exist, even if it means giving your bank the pink slip.
Greg McBride is a financial analyst
for Bankrate.com.
For advice regarding your specific
situation, please e-mail one of Bankrate.com's
Q&A experts or visit the Personal
Finance Advice channel on Bankrate.com.
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