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Guide to choosing

Choosing the right way to manage your money can be tough. There are a few things you need to think about before deciding:

  • How easy is this to use?
  • Does it help me manage my money well?
  • How expensive is it?
  • What happens if I lose my wallet?

  • Can I earn interest if I keep my money there?

Click here to see a chart that compares checking accounts, prepaid cards, and cash ( Adobe® Acrobat® Reader® required).

Here’s a way to think about your options:

. Checking Account Prepaid Cards Cash / Money Orders
Ease/ Convenience • Have to show identification at the point of sale

• Some merchants and landlords do not accept checks

• Can link to an ATM\debit card for greater ease and convenience. 		• Features depend on type of card

• "Signature" cards accepted at most retail locations

• Other cards (e.g. gift cards) selected at only a few locations
• Always available if it's in your pocket
Money Management • Bank account statements help you track spending and balancing your checkbook can help you stick to your budget
• Balancing your checkbook can help you stick to your budget.
• Some prepaid cards give account statements • Harder to track expenses/budget
Cost • Monthly fees range from $0 to $10

• Bounced check fees can cost up to $35 check 		• Monthly fees range from $3 to $10

• May or may not have overdraft fees

• May have fee to reload your card 		• Check cashing fees cost at least 2% of the value of the check

• Money orders range from $1 to $5

• Fee for each transaction adds up.
Safety • Deposits insured up to $100,000

• Protection if your checkbook or ATM card is stolen 		• Some prepaid cards have bank account protections. • No protection if your cash is stolen
Interest Earned? • Some high balance checking accounts and all savings accounts earn interest. • Some prepaid cards have savings options that earn interest. • None



Ease and Convenience

As you can see, the type of banking you choose has a lot to do with how you use your money. Some people prefer having their money somewhere where it is hard to get to because it forces them to budget what they have in their pocket. Others like to be able to access their money anytime, anywhere. Think about where you fall along this scale.

With a bank account or debit card, each time you need to get money out of an account, write a check, cash a check/money order, make a withdrawal at an ATM, or pay with a debit card, you are making a transaction. You should have a rough idea of how many transactions you make in a month because it will help you to figure out the best deal. Choose the option that is most closely matched to your needs.

Fees and Charges

Once you have figured out how often you want to access your money, you need to think about the costs. Banks and credit union checking accounts may charge monthly account maintenance fees if your money falls below the minimum balance requirement. They may also charge fees based on the number of transactions that you make. Prepaid cards can differ a lot from one card to the next. Fees on a prepaid debit card may include annual, monthly, start-up, per-transaction fees and fees to reload money onto the card. Not all of these fees are found on each card but you need to look carefully at the options.

If you use a check-casher to cash your paycheck, buy money orders and pay bills, you usually have to pay for every transaction. Once your check is cashed, you can decide to purchase money orders to pay bills or (if offered) use a bill payment service. These are also on a per transaction basis.

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Safety

Another thing to consider is choosing a place where your money will be safe and secure. While cashing your check at a check-casher and walking out with all your money in your pocket may be convenient, it certainly is not the safest. In contrast, depositing money in a checking or savings account at a bank or credit union ensures that your money will stay safe. The federal government insures all of your deposits in banks, savings institutions, thrifts and credit unions for up to $100,000. This means your money is safe if the bank or credit union has a financial problem.

Some prepaid cards and payroll cards have to follow certain laws that protect the customer. Most prepaid debit cards do not currently offer this. By July 2007, payroll cards may be required by law to be linked to accounts like this. If the card is lost or stolen and you report it right away, your money would be safe. When you shop for a debit card, you should always ask what happens if the card is lost or stolen.