Banking: Consumer Tips
Your bank accounts are primary ways to store your money, pay your bills and build your savings. When you shop for a bank, consider the actual products and services, location of branches, and online and mobile banking features.
Savings and Checking
When it comes to finding a safe place to put your money, there are a lot of options. Savings accounts, checking accounts, certificates of deposit (CDs) and money market accounts are popular choices. Each has different rules and benefits that fit different needs. The bank or credit union must provide you with the account terms and conditions when you open your account. When choosing the one that is right for you, consider the following:
- Minimum deposit requirements — Do you have to keep a minimum dollar amount in your account to earn interest or avoid account maintenance fees?
- Limits on withdrawals — Can you take money out whenever you want? Are there any penalties for doing so?
- Interest — Can you earn interest on your accounts? How frequently is it paid (monthly, quarterly)? Check with banks or credit unions to see and compare their current published rates.
- Online bill pay — Can you pay your bills directly from your bank or credit union's website?
- Deposit insurance — Is the bank insured by the Federal Deposit Insurance Corporation (FDIC)? Is the credit union insured by the National Credit Union Share Insurance Fund? You are insured up to $250,000 per financial institution. If you have a joint account, that account is covered separately for $250,000.
- Mobile banking — Can you access your accounts and make deposits from your mobile phone or tablet? Does the bank charge fees for this access?
- Convenience — Are there branches or ATMs close to where you work and live? Can you bank by phone or Internet?
- Money transfer — Does the bank have a system that lets you transfer money to your accounts at other banks or to other people?
If you are considering a checking account or another type of account with check-writing privileges, add these items to your list of things to think about:
- Number of checks — Is there a maximum number of checks you can write per month without incurring a charge?
- Check fees — Does the account have a monthly fee or a charge for each check you write?
- Holds on checks — Is there a waiting period for checks to clear before you can withdraw the money from your account?
- Debit card fees — Are there fees for using your debit card?
- Account fees — Does the bank charge maintenance, withdrawal or minimum balance fees on your checking or savings account?
Overdrafts and Bounced Checks
What happens if you try to cash a check, withdraw money or use your debit card for an amount greater than the amount of money in your account? It depends on whether or not you opted in for overdraft protection:
- If you did not opt in, your bank will reject the payment and not pay on your behalf, and no fee is charged.
- If you opted in for overdraft transfer protection, your bank will transfer money from your savings account or a line of credit, for a fee.
- If you opted in for overdraft protection, your bank will pay for transactions and charge you a fee for each payment it covers for you.
The FDIC offers a guide to overdraft fees. Go to https://www.fdic.gov/consumers/overdraft/ for more information.
Transaction Reordering
Some banks reorder the processing of your daily transactions. Instead of processing your payments and deposits in the order that you made them, the bank can reorder them based on type (check, electronic payment) or size (larger amounts processed first) of the debit. Transaction reordering can cause your account to have insufficient funds to cover your purchases, even if you made a deposit on the same day. If you have opted in for overdraft protection, your bank could cover the purchases but would charge you a fee for each instance.
ATM or Debit Cards
With a debit card and personal identification number (PIN), you can use an automated teller machine (ATM) to withdraw cash, make deposits or transfer funds between accounts. Some ATMs charge a fee if you are not a member of the ATM network or are making a transaction at a remote location.
Retail purchases can also be made with a debit card. You enter your PIN or sign for the purchase. Although a debit card looks like a credit card, the money for the purchase is transferred immediately from your bank account to the store's account. When you use a debit card, federal law does not give you the right to stop payment; you must resolve problems directly with the seller.
If you suspect your debit card has been lost or stolen, call the card issuer immediately. While federal law limits your liability for a lost or stolen credit card to $50, your liability for unauthorized use of your ATM or debit card can be much greater, depending on how quickly you report the loss:
- If you report a debit card missing before it is used, you are not responsible for any unauthorized withdrawals.
- Your liability is limited to $50 if you report the loss within two business days after you realize your debit card is missing. It increases to $500 if you report the loss between two and 60 days.
- If you have not reported an unauthorized use of a debit or ATM card within 60 days after your bank mails the statement documenting the unauthorized use, you could lose all of the money in your bank account as well as the unused portion of your line of credit established for overdrafts.
- Sign up for text message or email alerts each time your debit card is used, so that you can know immediately if it has been used fraudulently.
Check the policies of your card issuer. Some offer more generous limits on a voluntary basis.
Protect your PIN.
Beware of "shoulder surfers." Be suspicious of anyone lurking around an ATM or watching over your shoulder while you use your debit, ATM, or chip and PIN credit card. Some thieves even put a device over the card slot of an ATM or gas station pump to read the magnetic strip and record your PIN; this is known as "skimming." If you suspect criminal activity, walk away and use a different ATM.
U.S. General Services Administration (GSA). (2016, January). Banking. In Consumer action handbook (pp. 5–7). Retrieved December 2, 2016, from https://www.usa.gov/