Personal Finance 1st Edition by Jack R. Kapoor

Exercise 9

1     What factors are commonly considered when selecting a checking account?

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2     Are checking accounts that earn interest preferable to regular checking accounts? Why or why not?

Action Application Observe customers making payments in a retail store. How often are cash, checks, credit cards, or cash cards used?

Step 1 of 2

1. Factors considered when selecting a checking account are-

• Restrictions

• Minimum balance to be kept on deposit to earn interest or avoid a service charge.

• Federal deposit insurance

• Hours and location of branch offices

• Holding period for deposited checks

• Fees and Charges

• Monthly fee

• Fees for each check or deposit

• Printing of checks

• Fee to obtain cancelled check copy

• Overdraft, stop-payment order, certified check fee

• Fees for preauthorized bill payment, fund transfer or home banking activity

• Special Services

• Direct deposit of payroll and government checks

• 24-hour teller machines

• Overdraft protection

• Banking at home

• Discounts or free checking for certain groups(students, senior citizens, employees of certain companies)

• Free or discounted services such as traveler’s checks

• Interest

• Interest rate

• Minimum deposit to earn interest

• Method of compounding

• Portion of balance used to compute interest

• Fee charged for falling below necessary balance to earn interest