Online Banking: Accounting for Your Accounts

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Banks offer a wide variety of accounts, but you generally can boil them down into the five types we describe in the sections that follow. The Federal Deposit Insurance Corporation (FDIC) usually insures each type of account for up to $100,000. Most banks offer all five kinds, so you can select one or more at the same location or elsewhere. Review each overview of the accounts listed below to determine what types you have.

Savings account

Savings accounts are designed to encourage individuals to save by paying them interest on the funds they maintain in the account. Generally, the amount of interest paid for a savings account is more than for an interest-bearing checking account but less than for a money market deposit account (MMDA) or CD. Banks often charge a fee whenever a savings account balance falls below a specified minimum.

For example, at SunTrust (www.suntrust.com) if your savings account balance falls below $400 you are charged a fee of $10. You often can view savings account information on your bank's Web site. If you use software like MS Money or Quicken, you also can download your savings account information to the program. Additionally, if you want to transfer funds from your savings account to another account at the same bank, you can use your personal financial software or the bank's Web site to do so. Keep in mind that a transfer or other similar transaction usually is completed by the beginning of the next business day.

Basic checking account

Basic checking accounts have a limited set of features. The average minimum initial deposit for opening a basic checking account is about $50. With this account, you can write checks, download information, and receive monthly statements. However, these bare-bones accounts don't pay interest on account balances and may restrict the number of checks you can write per month or charge fees when you write more than a certain number of checks per month.

Keep that balance up! The convenience of using a basic checking account can cost upward of $200 a year in banking fees when you fail to maintain the minimum balance in your account.

Interest-bearing checking account

With an interest-bearing checking account, you earn interest on your account balance, can write an unlimited number of checks, and have access to the convenience of using a debit card. The amount required to open an interest-bearing checking account often is $100, and the bank usually sets a minimum balance (frequently $1,500 or more) for maintaining the account without a service charge. If you fall below that amount, you'll be dinged with the fee.

The amount of interest that you earn in an interest-bearing checking account frequently isn't as much as you'd otherwise earn by investing the minimum balance in equally insured financial products. Although the account's debit card looks like a credit card, it actually is connected to your bank account. In other words, no credit is involved in debit card transactions. Remember: Inflation usually outpaces what banks pay in their interest-bearing accounts.