- The
annual percentage yield and interest rate;
- Cost
information, such as fees that may be charged; and
- Information
about other features such as any minimum balance amount
required to earn interest or to avoid fees.
You will
usually be provided with disclosures before you actually open
a bank account. However, if you ask for it, a bank must give
you information about any consumer deposit account it offers.
In addition, the law generally requires that interest and
fee information be provided on any periodic statements sent
to you.
In shopping
for a bank account, it is important to look closely and compare
features. Here are some of the most common features to compare:
Rates
Interest
Rate
- The rate of interest (interest is money a bank pays you
for its use of your funds), expressed as a percentage, that
an account will earn if funds are kept on deposit for a
full year. It does not reflect the effect of compounding
interest.
- What
is the interest rate?
- Can
the bank change the rate after you open the bank account?
- Does
the bank pay different levels of interest depending on
the amount of your bank account balance, and, if so, in
what way is interest calculated?
Interest
Compounding - The frequency that earned interest is
added to the principal so that you begin to earn interest
on that amount as well as on the principal. Often referred
to as interest on interest. The more often interest is compounded,
the greater the annual percentage yield.
- How
often is interest compounded? In other words, when does
the institution start paying interest on the interest
you have already earned in the bank account?
Annual
Percentage Yield (APY) - The APY is a rate that reflects
the amount of interest you will earn on a deposit on a yearly
basis expressed as a percentage.
- What
is the minimum balance required before you begin earning
interest?
When
You Start Earning Interest - Interest is money a bank
pays you for its use of your funds.
- Do
you begin earning interest on the day you deposit a check
into your bank account - called earning on your ledger
balance?; or
- Do
you begin earning interest later, when the bank receives
credit for the check - known as earning on your collected
balance?
Fees
- Will
you pay a flat monthly fee?
- Will
you pay a fee if the balance in your bank account drops
below a specified amount?
- Is
there a charge for each deposit and withdrawal you make?
- If
you can use ATMs to make deposits and withdrawals on your
bank account, is there a charge for this service? Does it
matter whether the transaction takes place at an ATM owned
by the bank?
- If
you have a checking account or a money market account, how
much will ordering checks cost? Will you be charged for
each check you write?
- Are
fees reduced if you have other accounts at the bank?
- Are
fees reduced or waived if you agree to directly deposit
your paycheck or government payments, like a social security
check?
- What
is the fee if you request the bank to stop payment on a
check you have written?
- Is
there a charge for asking how much money you have in your
bank account (a balance inquiry)?
- Does
the bank charge a fee for closing a bank account soon after
it is opened? If it does, when will the fee be imposed?
- What
is the charge for writing a check that bounces (a check
returned for insufficient funds)? And what happens if you
deposit a check written by another person, and it bounces?
Are you charged a fee?
Other
Features
- Does
the bank limit the number or the dollar amount of withdrawals
or deposits you make?
- If
you close the bank account before interest is credited to
your account, will the bank pay you the interest that has
been earned until that time?
- How
soon does the bank allow you to withdraw funds that you
have deposited to your bank account?
Time
Deposits - An account, such as a certificate of deposit,
with a maturity of at least seven days, from which you are
not generally allowed to withdraw funds unless you pay a
penalty.
- What
is the term of the account? In other words, how long is
it until the maturity date?
- Will
the account roll over automatically? In other words, does
the account renew unless you withdraw your money at maturity
or during any grace period provided after maturity? A
grace period is the time after maturity when you can withdraw
your money without penalty. If there is a grace period,
how long is it?
- If
you are allowed to withdraw your money before maturity,
will the bank impose a penalty? If so, how much?
- Will
the bank regularly send you the amount of interest you
are earning on your account - or regularly credit it to
another account of yours, like a savings account?
 
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