Almost everyone that can get a checking account has one. It’s just a normal part of growing up and being an adult. Chances are you might not even think about your checking account. All you care about is that your money is safe and there when you need it. Even so, there are a few disadvantages of a checking account that you need to be aware of.
The Disadvantages of a Checking Account
A checking account is a type of bank account where the user can make deposits or withdrawals at any time.
The main purpose of keeping a checking account is to have quick access to the funds in it.
For example, when we use a debit card to buy food from a restaurant, we do not have to carry cash with us or keep exact change for purchases.
Everything is done electronically. It saves time and effort.
However, there are some disadvantages associated with a checking account as well.
Some of the major ones include the following.
1. High Bank Fees
Banks charge high fees for different activities conducted through checking accounts; such as monthly service fees and overdraft fees.
Depending on your account, if you write too many checks you might be charged additional fees as well
Also, the bank may limit the number of times you can use the ATM before they start charging you a fee.
You need to understand, the bank is there to make money and they will charge for everything they can get away with.
For example, my bank charges $2.00 dollars if you ask them to print out a copy of your transactions. This used to be free.
2. Risk of Identity Theft
With the growing technology, the potential for identity theft has also increased.
It is possible for hackers to access someone’s personal information and drain their checking account.
I have had my bank account hacked four different times.
Luckily, they never got much money because I figured out what was happening before they could.
Even so, it is very stressful and it can be difficult to get your money back.
Each time, they hacked in through my debit card. That’s why it is always best to use a credit card for purchases and then just pay it off every month.
That’s what I do now.
I also have an app on my phone that allows me to shut my debit card off which is great.
A friend of mine has a real issue.
Someone used her checking account to pay for their TV cable bill. This hacker set up an automatic payment that was coming directly from my friend’s account.
When she went to the bank, they couldn’t stop it and when she called the cable company they said they couldn’t give her any information as it wasn’t her account.
In the end, she had to close her bank account and open a new one. She ended up losing $800 dollars that she never got back.
If you have a checking account, you need to keep a close eye on it.
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3. It’s Inconvenient
It is hard to keep track of all transactions done using a debit card.
You need to check your statements carefully to ensure everything is how it should be and in order to check how much money has come in and out of your account and for what.
Tracking down a specific transaction can be difficult as well.
Also, if you don’t live close to your bank, you may end up driving all over town to find a branch.
4. It’s Unsafe
It is possible for someone to skim off the information on your credit card through a skimmer.
If he happens to be in your vicinity, he can easily send this information over the internet and drain your account.
When you use a debit card, the merchant or any other individual around you can see your account number and watch you put your PIN number into the card reader.
Not to mention, it isn’t guaranteed that you will get your money back from the bank.
Even if you do, it can take some time.
When one uses a credit card, he or she has some protection from fraud.
For example, if someone were to use your credit card without your knowledge, you will be compensated for any losses incurred from the fraudulent charge.
That’s not always true with a bank.
5. Large Amounts of Paperwork
In order to keep track of everything, you need various records like debit slips and bank statements.
Managing them becomes difficult with time and they may get misplaced.
You’ll also need to reconcile your bank account each month to make sure you have the amount of money in your account that you think you do.
6. Low-interest Rates
Banks do not offer attractive interest rates on checking accounts.
So, people are advised to invest the money in other investment vehicles.
Most checking accounts don’t offer any type of interest. If you find one that does, the chance is you will have to keep a minimum balance.
7. Difficult to Use
If you happen to lose your debit card, it is hard to retrieve all of your cash from the bank.
You’ll have to go through the hassle of canceling your card and then you’ll have to wait a couple of weeks to get a new one.
While you’re waiting, you’ll have to physically go to the bank to receive cash. You won’t be able to use online banking.
8. Minimum Balances
Some accounts require you to have a minimum balance. If you don’t you will be charged a monthly fee for going under the required amounts.
I once had an account that required a balance of $2,500 dollars. If the balance stayed above that amount I receive a small amount of interest.
If it went below that amount, I was charged a fee.
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To Sum it All Up:
There are some advantages of having a checking account but beware of the downside. From hackers to bank fees, a checking account can cost you. Chose your account wisely and look for free checking before you open your account.