Alternatives to Traditional Checking and Savings Accounts

October 18, 2010

It’s always a good idea to have a safe place to save your money. For most of us, this means a checking account or savings account in an FDIC or NCUA insured bank or credit union. However, even if you decide that you don’t want to have a checking or savings account, you’ll still probably need to cash checks from time to time, and you’ll still probably need a way to handle certain basic financial transactions, like paying your utility bills.

Here is some advice about some of the alternatives to traditional savings and checking accounts. Even though many of these alternatives may seem fairly straightforward you need to be very aware of the fees associated with these services.

Check Cashing Centers.

  • One important reason many people have checking accounts is so that they have a place to deposit or cash their paychecks. Because of fraud and counterfeiting-related issues, many grocery stores and other and local businesses no longer offer the check cashing services that they once did. Increasingly, check cashing businesses have stepped in to fill the void. These businesses will cash payroll and other types of checks, including some personal checks, for a small fee.
  • Sometimes these businesses also offer other useful services to individuals who don’t have traditional savings or checking accounts. For example, these check cashing centers often provide bill-paying services (people without checking accounts might otherwise find it difficult to pay utility bills, for example), and the opportunity to fund prepaid debit cards. All of these services come at a price, but for many consumers the price is worth the convenience of being able to handle a number of different financial needs in a single place.
  • Prepaid Debit Cards

  • Prepaid Visa or MasterCard debit cards can be used like standard debit cards, except instead of being tied to a person’s checking account, the cardholder pays cash to the prepaid card company, and the company keeps that cash in an electronic account that’s associated with the card. For consumers who have had problems with overspending, prepaid debit cards can be a great help since they aren’t charge cards – the cardholder can never spend more than the balance that they’ve deposited on the card.
  • Holders of prepaid debit cards are responsible for fees that traditional debit cards don’t have (such as a monthly charge of a few dollars, and a small fee for any cash deposits that are made to the card), but they give the holder the opportunity to have the convenience of a debit card, rather than having to carry large amounts of cash.
  • Cash Management Accounts

  • For individuals who have stock or mutual fund investments, their brokerage company may offer cash management accounts. These accounts are similar to checking accounts in that the holder can write checks against their account balance, and can use a debit card that’s linked to the account. Users often find these kinds of accounts to be very convenient, because they don’t need to manage separate investment and checking accounts, or worry about moving money between the two accounts.
  • Regardless of what type of service you consider using to assist you in managing your money, be sure to evaluate the pros and cons of that service, and to understand the fees that may apply.

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