Where would you keep your money if you didn't have a bank account? How would you pay your bills or make purchases if you couldn't write checks or carry a debit or credit card? You may feel, as does the vast majority of people, that this is not an option you wish to contemplate. And, yet, as much as you rely upon that convenience, you may also feel quite negatively toward your bank for charging you what you may regard as unnecessarily high fees. Is it possible to enjoy fee-free banking? Absolutely. Learn how to get the most out of your checking and saving accounts without breaking the bank.

Historically, the business of banking has been about lending money. It's no less true today. However, a bank cannot simply open its doors and start accepting consumer deposits to accumulate lending capital. The capital requirement for starting a bank is typically between $4 million and $10 million, 10-15% of which is the responsibility of the organizer(s). The remainder may be raised by shareholders. Beyond this requirement, the bank may then solicit additional lending capital by offering services to depositors.

Once the bank has raised sufficient lending capital via its organizers, shareholders, and depositors, it then begins the business of lending money to make money. But what's to prevent the bank from lending all of its capital so that there's no cash available when you request it? Regulation D requires that every bank keep between three and 10 percent of its deposits in reserve and is the principal reason why there are withdrawal and transfer limits on savings and money-market accounts.

Since most consumers limit their banking to opening deposit accounts, this tutorial will address only checking and savings accounts. Educating yourself about basic banking products and services, before opening any accounts, is a great way to eliminate most or all of the most common bank fees. The next step is to choose a bank that fits your needs.

While it's true that banking products and services are essentially the same, there can be important differences in the ways in which these services are delivered that can affect your banking experience. To determine which bank delivers the best products and services for your particular needs, you may want to ask yourself some questions.

How often will I need to access my money? The type of account, and the frequency and manner of withdrawals, can determine whether or not you'll be charged fees. Every bank has processing costs, but each bank will determine how it passes on some of those costs to its customers. Ask your bank: "What fees do you charge for withdrawals on checking and savings accounts?"

How much money do I have available to deposit at this time? Different accounts have different initial-deposit and minimum-balance requirements. If you fall below the account minimum, you can be charged a monthly fee, typically between $5.00 and $7.00 a month. Ask your bank: "What are the initial-deposit and minimum-balance requirements on your different accounts."

Does my employer offer direct deposit? Many banks offer accounts that will waive the minimum-balance requirements if you're receiving a direct deposit each month. However, if the direct deposit stops or is interrupted, either your account will incur fees or you'll be switched to a different account automatically. You can also incur fees if the amount of your direct deposit doesn't meet the minimum amount required to waive fees. Even if any of these scenarios occurs, you usually have a grace period, typically three months, to correct the issue or to choose a different account before your account is switched to a default account. Ask your bank: "What account(s) do you offer for people who get direct deposit?" * "If my direct deposit stops, must I change my account?" * "If so, what is my grace period, and what type of account will I be switched to if I don't choose one?" * "If not, what is the minimum-balance requirement, and how much will I be charged if I don't maintain it?"

Can I afford to set aside money in a savings account without touching it often? With certain stipulations, Regulation D establishes withdrawal and transfer limits on savings and money-market accounts. Outside of these limits, a bank may establish further limits. It's more prudent to make a transfer to savings once a month than to deposit it frequently, only to withdraw it to pay bills or to make purchases. Ask your bank: "What withdrawal and transfer limits do you place on savings and money-market accounts?"

What time do I have available to get to the bank to make deposits or withdrawals? Banking hours and cut-off times vary from bank to bank. Cut-off times ensure that each bank's business will be processed on that day. For purposes of processing, however, business days are Monday through Friday, except for federal holidays. While some banks may elect to conduct business on Saturday, and even Sunday (called banking days), no bank does its processing on the weekend, because the Federal Reserve is closed. Consequently, all business conducted on the weekend is considered Monday's business, unless Monday falls on a federal holiday. Ask your bank: "What is your cut-off time for processing?" * "What are your banking hours?" * "How many branches do you have for my convenience?" * "Can you provide a map of locations?"

Do I prefer to do my banking inside the bank or at the Automated Teller Machine (ATM)? While ATMs are available 24 hours, their cut-off times often differ from those of bank tellers. This difference pertains to how each bank handles the processing for each venue. Another consideration is the number of ATMs that a bank owns or leases (sponsors), which is affected by the ATMs' locations. If you must use an ATM not owned or sponsored by your bank, you will be charged an foreign-ATM fee by your bank. This is often in addition to the ATM fee charged by ATM servicer. However, if your bank has few branch locations, it may waive its own foreign-ATM fee as a convenience for its customers. Ask your bank: "What is your cut-off time for using the ATM?" * "How many ATMs do you have for my convenience?" * "Can you provide a map of locations?" * "How much do you charge for using a foreign ATM?" * "Do you ever waive this fee for your customers?"

Am I committed to keeping accurate account records? This determination is very important, because lack of accurate record keeping can generate high, frequent overdraft (OD) and non-sufficient funds (NSF) fees. If keeping records is not a priority, then you'll want to compare these fees when shopping for a bank. Some banks charge both, while other banks equate the two in one fee. To make record keeping easy, a transaction register is included in every order of checks. However, if you choose not to write checks on your account, your bank can provide a register free upon request. Ask your bank: "Do you charge both an OD and an NSF fee?" * "How much for one or both?"

Will I need overdraft protection? One way to avoid OD and NSF fees is by establishing an account that can transfer money to cover overdraft. This can be either a savings account or a line of credit. In either instance, an overdraft-protection fee will be charged, but it will be considerably less than either an OD or an NSF fee. On the one hand, using a savings account means that you're transferring your own money. However, if overdraft-protection transfers potentially exceed Regulation D limits, then such transfers may not occur, and OD/NSF fees may still accrue. On the other hand, using a credit line--such as a credit card or a home-equity line of credit (HELOC)--means that you may not only be charged interest but that you may also be charged either an overdraft-protection fee or a cash-advance fee. Ask your bank: "What type(s) of overdraft protection do you offer?" * "What are the fees that I can expect to pay with each type?" * "If I can use a savings account, what are the consequences if an overdraft-protection transfer would exceed Regulation D limits?"

• Once you have decided which bank will best suit your needs, you will need to know what is necessary to open an account.

1. Bring picture identification (ID). This can be either a current driver's license or a state ID. If you're coming from out of state, you will need to ask if your bank requires you to have a new license, with your new in-state address, before opening an account. Also, call your bank ahead of time to find out what secondary ID may be required.
2. Bring the minimum deposit amount, in the form of cash or check. Depending upon the type of check, you may not be able to get cash back right away. Typically, checks deposited on new accounts have ten-day holds during the initial (probationary) period, which is generally 30 days. Ask your bank which checks will be qualified for immediate cash back and which will be subjected to the new-account hold.
3. If you would like the bank to decline all checks or other authorizations (debit-card authorizations excluded) that overdraw your account, let the bank know. Please keep in mind, however, that returned items still generate non-sufficient funds (NSF) fees.
4. Order checks if you expect to need them. Your bank may provide a complementary pack (about 10 checks), but this is only to offer a sampling of the different check styles available. You'll need to order your first box. Ask if your account comes with free checks.
5. Request a debit card, and get clarification about how to use it correctly. Taking the time to do this, at the outset, can save you a lot of money and frustration. If you don't expect to use checks, then request a free transaction register, and begin to use it immediately.
6. Read the account contract and the fee schedule that every bank is required to give you. While you can expect this to take some time, the effort will pay off. Such knowledge can help you to avoid common pitfalls that generate frequent bank fees.
7. Request the customer-service number and call whenever you have questions. Don't hang up until you have all of your questions answered satisfactorily.

In summary, understanding the business of banking can clarify why banks make certain decisions, determining your needs in advance can help you in your search for bank services that fit those needs, and coming prepared when opening an account, can all serve to make your banking experience fee-free and more enjoyable. Finally, developing a positive business relationship with your bank can be very beneficial when you're ready to take the next step to apply for a loan.