What to ask about checking account practices
What To Look Out For
1. When I make a deposit, will you credit my account as soon as possible so I won’t get unnecessary overdraft charges?
Red Flag: Anything other than an assurance that deposits are credited as soon as possible should raise a red flag.
2. Will the account balance disclosure I see online or at an ATM only include what funds are actually available for withdrawal?
Red Flag: Dig deeper if they don't assure you that you will always know how much money is in your account. Compare this institution's answer with that of others – does this one seem to show a good faith effort to keep you informed and help you avoid an overdrawn account?
3. I understand you are required to get my permission before automatically approving debit card transactions that would overdraw my account and charging a fee. Do you have cheaper alternatives to covering overdrafts and what are they?
Red Flag: If the bank or credit union does not tell you that you can link your checking account to a savings account or line of credit, consider this a major red flag. These are potentially much cheaper ways of covering overdrafts. Also ask what they charge for moving money from these accounts to your checking account, and how often they charge a fee for this transfer, whether it is per day, per incident or per dollar increment.
4. For those who do opt in to overdraft coverage for debit card transactions, what is your fee for transactions that are not covered by funds in the account?
Red Flag: It is never appropriate for banks or credit unions to charge overdraft fees for debit card transactions, when to simply decline the transaction costs the account holder nothing. Fees are typically around $34, and since debit card transactions are often small, you are typically paying a fee that is twice the amount you came up short. You still must pay insufficient funds (NSF) fees for a bounced check, but debit card overdrafts are a different matter, and you should seriously consider opting out of this system.
5. For those who do opt in to overdraft coverage for debit card transactions, is there a limit to how many times per day, month or year you charge a fee?
Red Flag: Again, it is not appropriate for banks or credit unions to charge overdraft fees for debit card transactions, when to simply decline the transaction costs the account holder nothing. Some banks charge multiple fees per day averaging $34 each for every debit card transaction made while you are in the red. This can quickly put you hundreds of dollars in the hole even for a handful of small transactions. If you use a bank or credit union that operates this way, we recommend you tell them you do not want your debit card transactions automatically approved for a fee. If you do so, they must let you opt out.
6. Do you charge a daily penalty if my balance remains below zero after a certain number of days?
Red Flag: Look for a “no.” A sustained fee makes it more difficult to bring your account back to a positive balance.
7. Some financial institutions subtract customers' debits from the highest to the lowest amounts, which can cause more overdraft fees. Do you do this, or do you subtract debits in the order they were made?
Red Flag: If the representative says they subtract debits from the highest to lowest, you may want to avoid this institution. Some claim their customers want it this way, but it often causes extra overdraft fees.