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Time for a checking-account checkup

See the most recent version of the checking study. Greg McBride

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 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 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.

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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 Look at your previous six months' statements, tally the amounts in fees, and compare it to the total amount withdrawn.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,'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

For advice regarding your specific situation, please e-mail one of's Q&A experts or visit the Personal Finance Advice channel on

-- Posted: March 30, 2001

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See Also
The best and worst accounts in the country
CHART: The 20 best deals overall
CHART: The 20 worst deals overall
CHART: Bricks-and-clicks checking accounts
CHART: Fees charged for ATMs and debit cards
CHART: The best Internet deals
Previous columns:
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