How to Choose the Best Checkings and Savings Accounts for Your Lifestyle

My first bank account was a teen checking account set up under my parents with Connexus Credit Union.

I opened it when I was 16 because I was about to start my first job, lifeguarding at our local YMCA. Eight years later, I have many more accounts.

I have some that I use, some that I am about to close, and some that have particular purposes. 

Now is a great time to look at bank accounts.

What are they?

They are more than an app and a flimsy plastic card.

Not all bank accounts are created equal. There are many different types of checking accounts, savings accounts, and hybrids in between.

I think that bank accounts are often overlooked because they can have a “set it and forget it” function.

This makes sense because as long as you have access to digital banking, you can live anywhere and still use the same account. 

I want to look at different types of bank accounts and how to shop around for the best combination of various lifestyles.

Like most products, there isn’t a ‘one size fits all,’ but there are plenty of ‘one size fits most.’ 

Checking

Most people are familiar with checking accounts.

It is almost impossible to get very far without one.

I couldn’t imagine any other form of being paid once I was introduced to direct deposit.

The purpose of a checking account is to have easy access to your funds and the ability to send or receive money.

The smallest local bank all the way to Chase or Bank of America all offer checking accounts.

They typically offer student checking, traditional checking, and business checking.

Banks want you to spend and receive money because they generate transaction fees.

In order to incentivize transactions, they usually have a $6-$12 monthly “maintenance” fee that can be waived if you meet a minimum balance requirement, use your debit card X amount of times, or have X amount deposited into your account on a monthly basis.

At the end of the day, checking accounts are not very flashy and do not typically offer any extra benefits for having them.

Some interesting accounts are the Chase’s checking with the Disney Debit card. Using this debit card gives discounts and exclusive perks at Disney world and their shops online.

Connexus Credit Union has an Xtraordinary Checking account that earns rewards when you use your debit card. Discover, and some other online banks are offering High-Yield checking accounts that generate cash back for debit card transactions. 

As you can see, there are plenty of options for checking accounts.

I do recommend shopping around and having at least one checking account that is from a large institution because they have better customer support and are familiar with transferring money abroad and other unique requests.

Savings

Savings accounts are always recommended, but they are not given the same attention as checking accounts.

At the fundamental level are only two types of savings accounts: standard and high-yield.

The main difference is the amount of interest you can earn from your account. Most banks can offer between 0.01-0.025% interest on their savings accounts.

On a balance of $10,000, that’s an underwhelming $25 in interest for a whole year.

Whereas high-yield savings accounts offer much higher rates that track the market more closely.

Even though rates are low, my interest rate on my high-yield account from American Express is 1.3%*. With the same balance of $10,000, that’s $130 in interest for the year.

Why are they so different?

Most banks that have brick and mortar branches have much higher overhead costs than online banks with centralized locations and very few branches.

Thanks to their low overhead, they are able to offer a much more competitive rate. 

Combining Accounts and Building Credit

I recommend having two checking accounts and two savings accounts because you won’t have all your eggs in one basket, and it is easier to set and track financial goals. 

*High-yield rates fluctuate with the market. When I opened my account a few years ago, I think my rate was 2.1%. Since the economy is down due to COVID-19 and the Fed has slashed rates, this is reflected in all interest-bearing accounts. As you can see, it is still MUCH higher than the average bank.