Is it worth upgrading from your Basic Bank Account?
It’s true that everyday bank accounts have some advantages. You usually don’t have to pay any fees just for having the account as long as you do other banking and you may only have to keep a small minimum balance in the account.
On the other hand, these basic accounts don’t offer many extras. You usually won’t earn any interest on your account and you’ll most likely have to pay extra for checks and to use an ATM. If you use your checking account a lot or keep a lot of money in it, you may want to consider upgrading to a premium account.
Basic checking accounts can be a good idea if you just need a place to park your pay check every week. Even if you have to pay a monthly fee, it’s still cheaper than using a check cashing service.
Many banks, however, will waive the fee if you directly deposit your pay check every month or if you do other business with the bank.
You may also only be required to keep a very small minimum balance or no minimum balance at all, which can be an advantage if you are living pay check to pay check. On the flip side, basic checking accounts often have lots of add-on fees and restrictions.
For example, you probably will be responsible for the full cost of books of checks. You may also have limits on transactions, such as writing checks and using ATMs and if you go over your allotted amount, you’ll be charged extra fees.
Some basic accounts also charge extra fees for things such as getting paper copies of bank statements.
Upgrading to a premium checking account may make sense if you have a large balance in your checking account and do a lot of transactions.
Premium accounts often require high minimum balances of $1,000, $10,000 or even more. But they also offer a lot of perks. Most premium accounts don’t charge a fee just for having the account, as long as you meet the minimum balance requirement.
Premium accounts also often waive normal fees, such as fees for buying new checks, fees for ATM transactions and, in some cases, even overdraft fees. Premium accounts may also offer discounts on other bank services, such as discounted fees for loans and discounts on retirement planning.
One other big plus with a premium account is the ability to earn interest. Although interest rates are extremely low right now, getting something is better than nothing.
Many premium accounts offer tiered interest rates, meaning the more money you hold in your account, the higher the interest rate will be.
The big thing to remember when considering upgrading to a premium account is whether you can meet the minimum balance requirement. If you can’t, there are often steep fees that wipe out the advantages of the account.
You also need to take into account how often you use the account. If you write several checks a day and use the ATM often, it might still be cheaper to have the premium account even if you have to pay the monthly fee.