Make your Checking Account work for you

A checking account is your primary 'spending' account. It generally allows unlimited deposits and withdrawals and seldom has minimum balance requirements.

In return it pays next to nothing as interest. But since its not practical to pay for everything with currency, you still need a checking account for check or debit card withdrawals.

Here are tips compiled by our readers on how to best utilize your checking account:

• Always read the fine print while opening a checking account. Checking accounts might charge fees for a variety of services including use of personal checks, ATM withdrawals, internet banking, low balances and so on. These days most banks offer 'free' checking accounts that waive most of these fees. However, even for such accounts, do check if there are any qualifying criteria (like requiring a monthly direct deposit or bill payment to or from the account)


• Since checking accounts do not pay interest, do NOT keep too much money lying about in the account. That money is better kept in a savings or brokerage account.


• Do not keep too little money in a checking account either. If you issue a check or incur a debit card charge and you don't have enough money in your account, you will incur an overdraft charge (usually $30 per transaction). A suggestion: keep an amount that's 25% more than your average expenditure between 2 paycheck periods.


• Some checking accounts are interest-bearing. Their rate of interest is usually lower than a savings account. But you might reason: some interest is better than none. And you'd be right - such accounts are not a bad option. Once again though, read the fine print. If the interest is paid only on maintaining a large minimum balance that's more than what you'd usually keep in a checking account, don't do it. But if the interest is paid on other qualifying criteria (like linking up a savings account in the same bank, or having a direct deposit made every month), you might want to consider it.


• There are many 'internet-only' checking account options these days. Such accounts are purely electronic. There is no physical bank branch and no physical checkbook (but you do get a physical debit card). You bank completely over the web, and make payments via electronic checks or via the debit card. By keeping the account electronic, banks are able to lower their operating costs and in return offer a better interest rate with no fees or minimum balances on the account.

A good website to compare interest rates, minimum balances and features of checking accounts in different banks is www.bankrate.com

A good 'internet-only' checking account recommended by readers is the Electric Orange checking account from ING

Also check out your local credit union. Often, the checking accounts with the least fees and surprises are the ones offered by credit unions.

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