High Interest Checking Account
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Ever look at an advertisement for a high interest checking account? While waiting in the bank you may have seen pictures of the carefree individuals who have chosen to open one of these interest bearing checking accounts. They are often shown frolicking in a vacation paradise or driving an expensive automobile. Yet the more one looks into the matter, the more one wonders just who is being taken for the ride. High deposit requirements and larger fees, (not to mention inflation) may steal away most of the advertised benefits of this type of checking arrangement. As James 4:13-14 says, "Go to now, ye that say, To day or to morrow we will go into such a city and continue there a year, and buy and sell, and get gain: whereas ye know not what shall be on the morrow..." Realizing the temporary nature of earthly riches, people still want to be good stewards of the finances they have received. How can that goal be best accomplished?
Take time to think about your personal financial needs. There are a great variety of financial instruments which are available. Consider fees and services which are especially relevant. Some banks give special considerations to present customers, or to those willing to arrange for direct deposit of paychecks, pension or government benefits. It is easy to get overwhelmed with the wide variety of choices available, yet an hour or so spent investigating these products can result in significant gains in the level of services or benefits the account includes. Shop for a high interest checking account as you would any other product or service, comparing cost and benefits.
Basic checking accounts can be opened, which do not have many services beyond check writing. These arrangements usually do not pay interest, and may charge a fee for writing checks beyond the number allowed by the bank. Most depositors do not keep extensive funds in their checking accounts, opting instead for holding savings in money markets or certificates of deposit, which yield higher interest. However, if a person needs to write checks and keep a significant amount of money in a checking account, interest bearing checking accounts can be an option. This way, the money can at least earn some return instead of providing the bank with a free loan. The interest is very low in most interest bearing checking accounts. There are some high interest checking accounts, but banks that offer this service usually require the client to deposit significant funds in order to realize the higher yield. Additionally, these accounts are assessed high service fees for instances of insufficient funds. For these reasons, most people choose to deposit funds in other financial instruments where the interest rate is better, the fees are lower, and the funds are more readily available.
With a high interest checking account, more services are offered. However, these may come with increased cost. There is generally no limit to the number of checks one can write. The interest rate which is obtained depends upon the amount of money left on deposit. Most banks charge a significant fee if the balance falls below the agreed-upon level. By way of comparison, money market arrangements usually offer a slightly higher interest rate, yet may require a higher minimum balance as well. The money market usually offers a limited check writing feature.
An interesting option which is still developing is the on line bank. Without the costs associated with a so-called 'brick-and-mortar' bank, they are able to pass the savings on to their customers. On line banks tend to offer a high interest checking account with the best rates. Another attractive feature is that often there are no terms requiring large initial deposits. It is simple to get quite a list of these banks with an Internet search. In a recent search, several were displayed which offered a 3% return or more, with only a $1 minimum deposit required to open the account. Higher rates were also available for reasonable deposits.
Research restrictions and fees carefully. Some banks do not have their own automated teller machines (ATMs). If a customer uses ATMs frequently, fees can add up quickly, as they may come from both the on line bank and the facility which provides the ATM. Some on line banks provide refunds of these fees as a way to attract customers. Other companies offer services related to on line banking, such as full service on line bill payment. In this service, the customer changes the billing address to the company address. The company receives the bills, and posts them on the customer's page. The customer then pays the bill on line. If electronic payments are not acceptable to the creditor, the company will even send a paper check. This is a useful option if one travels often.
The only apparent drawback to on line banking seemed to be in the area of settling disputes. When a customer has a problem, it is better to have the option of speaking to someone face to face. However, especially when one is mainly seeking to have check-writing services while earning some return in interest bearing checking accounts, it is likely that disputes will not pose a real liability. If one can earn a higher rate without tying up major finances, a person would likely be willing to take a chance and try an on line bank. Finally, be sure that the bank is insured by the Federal Deposit Insurance Corporation (FDIC). That way funds up to $100,000 will be as secure as possible.
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