Test Your Banker’s IQ

A good banker should be able to answer all seven of the following questions. If you get a blank look or a gentle drift of oral fog asks again. You’re entitled to a clear and simple statement that makes sense. If you don’t understand what the banker is saying, don’t blame yourself. Blame the banker, who probably doesn’t have all the facts and is covering up. If you had $10 for every “expert” who wasn’t, you would be rich.

Ask: With interest paying checking, what does the banking institution pay interest on? By law, it must pay on the money that is in your account at the end of each day. That is “day of deposit to day of withdrawal.” But some truly pay on each check from the day you put it in. Others pay only on the collected balance or on the Atlanta car title loans, which means you get no interest until the check has provisionally cleared. That usually takes one or two days but sometimes more.

Some banks advertise more than one rate, depending on the size of your deposit. They might pay 1.5 percent on balances up to $1,000 and 2.7 percent on larger amounts. But what exactly does that mean? There is a good way and a bad way to figure it.

Say, for example, that you deposit $2,500. You might get 2.7 percent on the whole amount, usually called a tiered rate. That is good. Or you might get 1.5 percent on the first $1,000 and 2.7 percent only on the remaining $1,500, usually called a blended rate. That is bad. In fact, it is a clip job. Avoid blended rates.

Ask: What is the penalty for falling below the minimum balance? The fee might exceed the interest that your account is likely to earn. If you cannot be sure of maintaining the minimum balance, switch to an account with a lower minimum, for example, a no interest paying account.

Ask: Can the bank truncate your checking account? With truncation, you get a monthly list of the checks you wrote but not the canceled checks themselves. If you need a copy of a check to prove that you made a particular payment, the bank might send it to you for free or might charge $1 to $5. Most customers like to get canceled checks, but you rarely need them. Truncated accounts are often cheaper; the bank may waive the monthly fee and minimum balance at title loans in Atlanta.