The checking-account wars are particularly heated in the bigger cities like New York, where millions of dollars in potential deposits walk by every day. Wachovia made a big marketing push with contests and free food. Bank of America increased its hours. Washington Mutual eliminated ATM fees for noncustomers. But banks everywhere are offering new customers a slew of free appliances and travel accessories to sign on. The bankers hope that newly won checking-account customers will stick around for car loans, college-savings plans, certificates of deposit and a mortgage. But before you start a new relationship, make sure it’s a good fit. Here’s how:
Know yourself. Figure out what you really want in a bank. Are you an ATM addict? Go for the national firm with the most machines. Only write a handful of checks a month? Look for “free basic checking,” or consider a cash-management account from your broker. Want to bank online? Get it free and make sure you like the interface before you sign up. Work 9 to 5? Go to the bank with the open lobby on Saturdays. Compare fee schedules and deals at bankrate.com.
Divide and conquer. Analyze your financial needs and shop for them separately. It’s not likely that the bank offering the lowest car-loan rates will be offering the highest CD returns.
Beware the bounce. If you’re creditworthy, you should be able to find a bank that will give you a line of credit for overdraft protection. Don’t settle for newer “bounce protection” programs that some banks offer in the guise of a generous favor. These programs will cover your checks, but charge as much as $30 for each check they cover.
Keep a cushion. It takes a minimum daily balance of about $400 for a free checking account and $3,000 to keep an interest-earning checking account “free.” Right now, many checking accounts are still paying close to 1 percent interest; money-market funds are paying about half that.
Check online deals. If all your deposits go into your account electron-ically, you don’t really need a local bank. Online banks like Etrade (etradebank.com), Bank of Inter-net (bofi.com) and Netbank (netbank.com) are offering some very good accounts, and many traditional banks take online account applications from anywhere.
Take the cash. You might skip the glazed doughnuts, but some deals are too good to pass up. Citibank is offering cash rewards of up to $100 to open an account. That’s really something you can take to the bank.
