I chose my first checking account based on which bank my parents used. I quickly realized that it wasn’t the best option for me after incurring hundreds of dollars of fees for EVERY. LITTLE. THING. (Think monthly maintenance fees, paper statement fees, overdraft fees, etc.) Finally, I did some investigating on what types of checking, savings, and credit accounts would be best for my situation and transitioned.
I’ll be transparent about what I use and why, simply to help guide your decisions but not to recommend that you do the same (unless you truly believe this might be a good option for you).
Checking and Savings account
I wanted a simple checking account (i.e., no hidden fees, no unreasonable restrictions and regulations) that I could use for my direct deposits and online payments. I rarely go into a physical branch, and I wanted everything to easily be done virtually. I also wanted high interest rates on checking and savings balances. I settled on Ally Bank, which was voted one of the least evil banks by CNN Money.
Some perks I enjoy include:
- Checking (“Money Market”) account APY (annual percentage yield) of 0.85%
- Savings account APY of 0.99%
- Full reimbursement of ATM fees from any ATM
- eCheck deposit option (deposit checks by taking photos from their app)
- Easy online banking
- Quick and 24/7 phone response time if I need to call with a question
Most other banks have APYs of 0.01% for checking accounts. So, while a $10,000 balance in a checking account at Ally will generate an additional $85 in interest, $10,000 in a Wells Fargo checking account will only generate $1. Wells Fargo’s “high-yield” savings APY is 0.03%. Can you say “cheap”?
One drawback to Ally Bank is that sometimes big corporate checks don’t go through with mobile deposits. So I have a backup Chase checking account that I use whenever I need to deposit these kinds of checks. As long as I keep a minimum of $1500 in the account, there are no fees.
Choosing a credit card can be just as difficult or more so. It’s important to have a credit card to build credit (this helps you get approved for loans and get lower interest rates), plus it can have perks if you’re responsible. It can also get you in deep doo-doo if you’re not.
Use the Google form below to determine what kind of credit card you might consider for your situation.
If you’re interested in a rewards card, this spreadsheet is a tool to help you easily compare the annual monetary benefit you would have from each card. You simply type in your monthly expenses and credit card information (annual fee and rewards rates). Then you can approximate how many rewards dollars you’ll earn each year.
For example, if you spend $1000 per month, the Capital One Venture Rewards card is the best. But if you only spend $500 per month, the Capital One VentureOne rewards card will rein in the biggest reward.
You also have the option to itemize your expenses since some credit cards offer different rewards depending on what you purchase.
Before you make your decision, keep in mind some things to watch out for when choosing a credit card:
- High rewards rates but impose a maximum on the amount you can spend to get that reward (e.g., 6% cash back on groceries, up to $6,000 spent annually)
- $0 annual fee the first year that increases in subsequent years