Once you have your checking account, you need to manage it in order to keep it. Good account management helps you to avoid unnecessary fees and helps you to maintain the account.
If you have trouble keeping enough money in your account to cover your payments or withdrawals, your bank or credit union might close the account and report you to a checking account reporting company.
If there is a negative report, you could have trouble opening a new checking account with a financial institution for up to 7 years. Checking account reporting companies must comply with the Fair Credit Reporting Act (FCRA).
This means, for example, that they must follow reasonable procedures to maximize the accuracy of the information that they provide to banks, and they can’t include most information that’s more than 7 years old. They can choose a shorter time period, and the checking account reporting companies typically disregard information that’s more than five years old.
Here are some tips for reducing the fees on your checking or prepaid account.
Pay attention to monthly service fees
Many financial institutions waive monthly service fees if you maintain a minimum balance or sign up for direct deposit. Some institutions waive these fees for senior citizens, students, or members of the military. Be sure to ask about these products if you think you might be eligible.
Keep track of your balance and any outstanding payments
Keep track of your account balance and your account activity to avoid spending more than you have in your account. Keeping track of your balance also helps you to keep the minimum balance you need in your account to avoid monthly fees. Some of the steps you can take are:
- Monitor your account Online or on your phone.
- Check your balance by phone or Online before you withdraw cash at an ATM.
- Check your balance by phone or online before you write a big check or make a big payment.
- Sign up for transaction alerts and low-balance warnings via e-mail or text.
- Don’t assume that the money you deposited is available immediately. Find out when the money you deposit will be available for your use. Ask if there is a “hold” on the money you deposit, and if so when the hold will be lifted.
- The payments that you make can be processed very quickly, so don’t make a payment from your checking account unless the money to cover it is already in your account and past any hold period.
Avoid overdraft fees
An overdraft occurs when you spend or withdraw more money than you have in your account and the bank or credit union pays to cover the shortfall. Overdrafts can be very expensive. Fees are generally charged “per item” and often as high as $35 or more per each overdraft transaction.
To resolve an overdraft, you generally have to pay back the amount of the negative balance plus all fees, and you may have to pay additional fees if you do not repay quickly.
