3 Checking Account 'Perks' That Aren't Worth Switching For

There's no shortage of checking accounts available these days. You've still got your big national banks, your community banks, and your credit unions. And now there are dozens of online banks trying to reel you in too. 

With so much competition, banks need to pull out all the stops if they want to attract your attention. Some offer great perks, like the option to access your paychecks early. But other so-called benefits are really not that big of a deal. Here are three I would never switch for.

1. High APY

This one might surprise you because when it comes to savings accounts, a high annual percentage yield (APY) is at the top of everyone's list. You'd think it would be the same for checking accounts, but it's not.

The two accounts have different purposes. Savings accounts are for holding onto extra money you plan to spend in the future. You probably aren't going to tap those funds very often, so your cash will sit there for a while. But checking accounts are designed for everyday spending. You're moving your money in and out all the time. 

Bank accounts typically earn interest daily (though it's paid monthly), so the more money in your account and the longer it sits there, the more you make. Since your checking account funds come and go more often, you probably won't have as much of an opportunity to earn substantial amounts of interest.

Plus, what's considered a good checking account interest rate is a far cry from a good savings account interest rate. The top savings accounts right now offer between 4% and 5% APY. Even the best checking accounts usually offer you less than 1% APY. 

If you have some extra cash you want to earn interest on, you're better off keeping it in a savings account instead of a checking account. A $1,000 balance left untouched for one year would earn you $45 in interest with a savings account that has a 4.50% APY. But if you leave it in a checking account with a 0.50% APY, you'll only make $5 during that time.

2. Sign-up bonuses

Sign-up bonuses are cash bonuses that banks offer to new customers if they open an account and complete certain qualifying activities within their first few months of account opening. Some are worth a few hundred dollars. They can be the cherry on top if you like the account, but they're not worth switching banks for on their own.

For one, it usually takes at least a few months to complete the criteria to earn the bonus and then sometimes it can take a few weeks more for the bank to deposit it into your account. And after all that, you're stuck with the bank account anyway. That might not be what you want if the account charges a monthly fee or if the bank has really terrible customer service.

When trying to decide whether a bonus is worth it, start by asking yourself whether you actually like the account without the bonus. If not, move on. If you do, think about how likely you are to get the bonus. If you know you only have a few dollars in your account normally, you probably aren't going to get a bonus that requires a $5,000 average daily balance. So in that case, you either have to just accept that the bonus is beyond your reach or move on and look for an account with a more suitable bonus.

3. Overdraft protection

Many banks offer overdraft protection so your transactions aren't declined if you try to use your debit card to withdraw more money than you have in the account. This sounds like it would be helpful in a pinch, but it usually comes back to bite you.

Banks typically charge costly per-transaction fees to customers enrolled in overdraft protection. Sometimes, these can be as much as $35 per transaction. At these prices, it's possible to rack up hundreds of dollars in overdraft fees in a single day if you don't realize what happened. 

Fortunately, an increasing number of banks, like Chime and Capital One, no longer charge overdraft fees. If you want overdraft protection, one of these institutions is the way to go. But it's still important to understand how your bank will handle overdrafts when they happen. And obviously, avoiding overdrafts is ideal if you're able to do it.

It's totally fine to include one or more of the above factors in your decision-making process when weighing whether to switch checking accounts. But none of them should be deciding factors. Instead, consider them alongside things like account maintenance fees, how easy it is to access your funds, and the quality of the account's online and mobile banking tools. Then, go with the account that checks the most boxes.