The bank account cheat sheet from our credit experts

Nov 09, 2020

Opening a bank account can be a little overwhelming. Not only do you have to choose a bank (and your parents’ bank isn’t always the best choice, because their financial situation is different from yours), you also have to make sense of all the account options available to you. It’s easy to get analysis paralysis and put it off altogether.

But banking is an important step toward more financial security. Bank accounts offer tools that clarify how you’re spending, help you save more, and even grow your savings with compound interest. There are a few things to consider when deciding to open a new bank account. Your considerations for any account you look at should include:


  • Fees
  • Overdraft policies
  • Interest rates
  • Accessibility
  • Account use and goals

We explain these 5 considerations in more detail below, along with a bank account cheat sheet you can use to understand the different types of accounts offered at most banks in the U.S. After reading about our 5 considerations, the cheat sheet will help break down which bank account is best for you.


5 things to consider when choosing the right bank account for you

1. Monthly maintenance fees

Most bank accounts come with a monthly maintenance fee that can range between $4-$20, and these fees have been rising over the past few years. Usually, you can get monthly maintenance fees waived by fulfilling certain requirements. These requirements might include maintaining a minimum balance, making a certain number of transactions per month, or signing up for direct deposit. 

It’s an unfortunate discovery to find out you’ve unknowingly been paying fees each month that could have otherwise been avoided. This is why fees are the first thing you should look at when opening a new bank account. What is the monthly maintenance fee, and can you easily meet the requirements to have it waived each month? 

Don’t get discouraged if the first bank you look at requires a minimum balance that’s too high for you. There are plenty of other great banks that might be a better fit for your financial situation.

2. Overdraft and non-sufficient funds fees

Next, check the account’s overdraft and non-sufficient funds (NSF) policies. Overdraft and NSF fees are terms that are often used interchangeably, but are technically different. Overdraft protection allows you to complete a transaction even if your account balance is at or below zero, while NSF fees are charged by the bank when the transaction is rejected and does not clear.

Overdraft protection may sound great in theory, but can end up being massively expensive. Some banks charge overdraft fees of $35 per transaction, so if you overdraft your account at the grocery store, then fill up on gas, and finally stop at a drive-through, you would owe a whopping $105 to your bank in fees alone, even if your drive-through snack was only a few bucks. 

That’s a pretty hefty penalty to pay, especially if financial difficulties were the reason your account balance reached zero in the first place. Before opening an account, you’ll want to understand a potential account’s overdraft options and make a selection that works for you.

We recommend seeking out banks that don’t assess overdraft fees. Two of our partner banks, Stash and Axos Bank, charge no overdraft fees to better protect their customers. In fact, Axos Bank is entirely fee-free and doesn’t charge overdraft or NSF fees. Banks with no overdraft fees can save you hundreds of dollars or more, making wealth-building that much easier.

3. Interest rates

Some bank accounts offer interest rates that allow your money to grow as you save. All savings accounts offer interest rates, and even some checking accounts (but it’s not usually necessary to consider checking accounts that offer interest unless you will maintain a very high balance). You should scrutinize the interest rates on savings accounts so you can maximize your money. 

All interest rates will fluctuate depending on the state of the economy and the interest rates determined by the Federal Reserve. This is normal, but some banks can offer much higher interest rates than others. Most basic savings accounts at large banks offer low interest rates.

Savings accounts offered through online banks can offer higher interest rates because online banks have fewer overhead costs, unlike banks with brick and mortar branches. Accounts that offer high interest rates are called High Yield Savings Accounts. Many high yield accounts don’t even charge maintenance fees or require a minimum balance!

4. Accessibility

You also need to think about how much access you’d like to have to the account and what type of access is important to you. Will you want to withdraw cash from an ATM that doesn’t charge fees? Will you prefer to do banking in person at a branch very often, or would you rather have an account you can easily access through online or mobile banking?

If being able to walk into a branch and talk with someone face-to-face is important, then fully online bank accounts may not be the best option for you. Similarly, if you know you’ll be withdrawing cash from an ATM – especially while traveling – choosing a large bank with bank-specific ATMs in many locations might be a good choice.

5. Account use and goals

Finally, you’ll need to decide how you want to use the account. How often will you need to access the funds? Will you primarily be depositing into an account as you save for emergencies or another large purchase? Or will you be using this account to pay for day-to-day expenses such as housing, food, and transportation?

The answers to these questions, as well as the minimum balances you plan to maintain, should further help you decide which account types are right for you right now. As your financial situation and goals change, there may be better banking options to consider in the future that will help you reach new goals more efficiently.

A bank account cheat sheet to help you choose with confidence

After you’ve explored each of the considerations above, you’re in a better position to decide which bank account is right for you. The credit experts from LOQBOX have compiled a cheat sheet of all the bank account types you’re likely to find at most banks in the US.


The bank account cheat sheet from the credit experts at LOQBOX

Account type

What is it?

Why choose it?

Checking account

A deposit account that allows for unlimited deposits and withdrawals.

Checking accounts are best for day-to-day use and usually come with a debit card for easy access to funds.

Savings account

A deposit account that pays interest on balances and limits withdrawals per month.

Savings accounts help prevent you from spending money you want to reserve for emergency funds and other big purchases. They even earn you money through compound interest!

Money market account

Money market accounts are for those with high balances. The maintenance fees are higher and can usually only be waived with high minimum balances.

Money market accounts offer better benefits to account holders, such as interest rates on checking accounts and check-writing capabilities that savings accounts don’t offer.

Certificate of deposit (CD)

A CD is a savings account that offers higher interest rates in exchange for a promise to keep the funds in the account for a certain period of time. Penalties are imposed if the funds are accessed earlier.

CDs are a good choice if you have funds set aside that you know you will not need to access for a certain period of time. Their higher interest rates allow your money to earn more without being held in riskier investments.

Individual retirement account (IRA)

IRAs are tax-advantaged investment accounts that are reserved for your retirement years. There are 4 types: traditional, Roth, SEP, and simple.

IRAs can supplement or replace an employer-sponsored retirement account. They come with significant tax advantages and can better prepare you for retirement.


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