When you are thinking about opening a deposit account, you should spend some time reviewing the features and requirements associated with the accounts you are considering. If you are new to banking, this may involve familiarizing yourself with some of the terms used to describe account features and requirements. While there are a number of terms that can help you understand banking services, let’s look at a few basic terms that will get you started.

  • Monthly service fees: This is a fee that most banks charge to provide you with an account. However, most bank accounts often provide a variety of options to avoid the monthly service fees, such as signing up for direct deposit or making a certain number of debit card purchases each month. 
  • Minimum balance: Deposit accounts may require you to maintain a minimum balance in the account to avoid a monthly service fee.
  • Additional fees: There may be other fees associated with using your account. Common fees include charges for overdrafts or using another bank’s ATM. Most fees can be avoided depending upon how you manage your account. At Wells Fargo, your monthly account summary provides information about monthly service fees and how they can be avoided. You can also ask your banker for a guide to basic service fees, such as this example .
For accounts that earn interest, here are some common terms:

  • Interest-earning accounts: In these accounts, interest is paid on the money in the account over a given period of time. Savings accounts and certain types of checking accounts may be interest-earning. 
  • Annual Percentage Yield (APY): This rate reflects the percentage your account would earn in interest over a 12-month period. Typically, an account with a higher rate that compounds more frequently will give you a higher yield.
Direct Deposit, debit cards and overdraft protection are just a few examples of the services that apply to some accounts:

  • Direct Deposit: A convenient, fast and secure service that automatically deposits recurring income, such as a paycheck or Social Security, into any checking or savings account you choose, giving you same-day access to your money on the day of deposit.
  • Debit Card: Debit cards are linked to a checking and/or savings account, allowing you to withdraw money and make deposits at an ATM and to make purchases at merchant locations. When you use a debit card, the money will be deducted from the primary linked checking account. Review the account's terms and conditions to see if any limitations apply.
  • Overdraft Protection: Overdraft protection is a service that automatically transfers money from a linked account that you select, such as a savings or credit account, when you don’t have enough money in your checking account to pay your transactions. When money is transferred from the linked account to your checking account, the bank may charge you a transfer or advance fee. Remember that this service can prevent overdrafts only if you have money or available credit in the linked account.

These are a few of the basic terms commonly used in banking that can help prepare you for a conversation with a banker. You should ask your banker for help understanding terms that are unfamiliar. Also, during that discussion, talk about your financial needs and goals to find the account that is best suited for you.

Which of the following could result in a fee being charged to you?

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