Choosing the right bank account is important. As the hub for all your cash inflows and outflows, you want it to be easy to use and not charge you any ridiculous fees that needlessly eat away at your balance. If you're just getting started with managing your own bank account, these tips will show you how to do it right.
Choose an Account with Minimal Fees
It's not necessary to pay fees for basic banking activities like maintaining a checking account or visiting an ATM because there are plenty of banks, especially online banks, that offer these services for free. Specifically, you want to avoid checking and savings accounts that require you to maintain a minimum daily balance to avoid a monthly service fee. When you're young, you usually don't have much of a cash cushion; living paycheck to paycheck is typical. You don't need the stress of making sure you have at least $1,000 in your account at all times, and you shouldn't have to pay a fee for having a low balance.

Earn Interest on Your Excess Cash
Once you've gotten more established and do have a cash cushion, you shouldn't keep it in your checking account. Your extra money will earn little to no interest there. Since inflation diminishes the value of your money over time, any money that you allow to sit around without earning interest is gradually shrinking in worth.

Your checking account is the place to keep the smallest amount of money you need to pay your monthly bills without risking any overdrafts or bounced checks. Any extra cash belongs in a high-interest savings account, a money market account, a certificate of deposit, a savings bond or another account that preserves your cash while earning interest and allowing easy access to your money in case you need to dip into your savings.

Use Online Bill Pay
Free online bill pay is another key service you should look for with a checking account. The reason you want this service is that it simplifies paying your bills and makes it easier to keep track of your bank balance.

If you pay each of your credit card bills through the credit card company's website and you write a check to pay your landlord, your student loan and your car loan, it's easy to lose tabs on the outstanding payments that will be leaving your checking account unless you are incredibly diligent about balancing a checkbook.

Ally is one bank that offers a free and easy online bill pay service. You can pay your rent or mortgage, credit cards, utility bills and everything else from a single screen after a simple setup process. When you want to pay a bill online, the website makes it easy to see how your available balance compares to the amount of bill payments you have scheduled, so you're less likely to bounce a check or incur an overdraft charge. It's also a good idea to schedule your bill payments to arrive a few days before they're actually due to avoid any late payment fees.

Stay Current with Technology
Many banks now offer a free service that allows consumers to deposit checks electronically by scanning and uploading check images via computer or photographing and uploading them via mobile phone. Not only will these services save you a trip to the bank, they'll help you keep better financial records. When you deposit checks electronically, you keep the original check, so if you ever need to identify a deposit later, you can simply sort through your old checks instead of contacting the bank to research it for you.

Online and mobile banking are also safer, you'll never get mugged at an ATM or be present during a bank robbery if you're banking from your home office. Online and mobile banking also allow you to bank at any time of day, so you don't have to miss depositing your paycheck before the weekend if you get off work after the bank closes or waste your lunch break making a trip to the ATM.

Know How to Get Cash Quickly
If you only use an online bank, you'll enjoy many conveniences and cost savings. However, one drawback is that if you suddenly need a large amount of cash, it can be difficult if not impossible to get it as quickly as you need it. There's no branch to walk into to make a large withdrawal or ask for a cashier's check, and you'll probably be limited to a few hundred dollars a day in cash ATM withdrawals.

Make sure you know your funding options in case you ever need a large amount of money on short notice for an emergency or for a major purchase like a car or a down payment on a house. Possible options include a short-term loan from your parents (if they're willing and able) or a second, no-fee bank account at a brick-and-mortar bank or credit union. You could also rely on a cash advance from a credit card. While a cash advance is normally a terrible option because the interest rate is so high and there's a transaction fee to boot, if you pay off the advance almost immediately, your costs will be minimal. Make sure to find out ahead of time what your cash advance line of credit is (it may be lower than your credit card limit), what fees you'll pay and how to access the money.

The Bottom Line
You might make some mistakes when you're new to banking, and while losing that money will sting, it's OK - you'll learn what not to do next time. What you really want to avoid are the bad habits that can make banking expensive on a daily basis, like choosing a bank account that charges lots of fees, failing to keep track of your balance and bouncing checks. If you follow the tips in this article, you'll be on your way to an inexpensive, efficient and convenient relationship with your bank.

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