Senior Bank Accounts: Should You Get One?

4 ways to size them up before you sign up
By Margarette Burnette for Next Avenue

It isn’t hard to figure out why some banks and credit unions offer special checking accounts for customers they call “seniors.” Once they establish banking relationships this way, they can try to entice the new accountholders with savings accounts, loans and retirement accounts.

But is a “senior” checking account (generally restricted to people over 60 or 65, though sometimes available to people 50 and up) a good deal for you? That depends.

If you’re currently paying steep fees for your checking account, it may be worth your while to shop around and see whether you can forge a better, less expensive banking relationship elsewhere, says Kari Middleton, a financial adviser in Palm Desert, Calif. “Senior accounts are aimed at older customers as an easy way to avoid bank fees,” she says.

Here are four things to do to size up a senior checking account offer and determine whether it’s worth your while:

1. Evaluate the perks  There are usually a number of benefits to senior checking, including free basic checks, cashier’s checks and money orders; a 50 percent discount on a safe deposit box rental and interest on the checking account. By contrast, some standard checking accounts earn interest, but they generally require higher account balances or you must pay monthly fees.

For example, in order to take advantage of U.S. Bank’s standard interest-earning Premium Checking, you must either pay a monthly fee of up to $13 or keep an average account balance of $5,000 or more. However, the bank waives the $5,000 requirement for customers over 65 who sign up for senior Premium Checking.

Some banks charge monthly fees regardless of age unless minimum deposit requirements are met, but lower the fees for seniors.  For example, BB&T has a standard checking account with a $12 monthly fee; its Senior Checking, for people 62 or older, costs $10 a month.

Older Massachusetts residents have a nice perk: state-chartered banks there must offer free checking to customers age 65 and over.

In addition to discounted maintenance fees, some senior accounts also offer travel-related deals that you might find useful, such as waived fees for out of network ATMs and free transactions at non-U.S. bank ATMs.

So be sure to ask about all a senior account’s perks.

2. Compare standard accounts and senior accounts head-to-head  That’s the advice of Susan Tiffany, director of personal finance information for adults at the Credit Union National Association. “Senior checking account needs aren’t significantly different from other consumers’,” she says.

A 2012 Pew research study analyzed senior checking accounts from the nation’s largest banks and credit unions and concluded that if you could maintain a balance of $1,500 or more, an age-focused account often had minimal benefit compared with standard offerings. However, Pew found, customers who use low-fee senior checking accounts with lower required minimum balances ($250 or less) could save around $50 to $100 a year in bank charges.

Since the study was published, many financial institutions have stopped offering low-fee accounts and discounts for people in their 50s and 60s, though. “There were a lot more senior banking accounts a few years ago,” Middleton says.

A more important consideration is likely to be how much money you can deposit and keep with the bank or credit union. If you maintain a sizable balance — say $25,000 or more— you may get discounts and extra services regardless of your age, Middleton says.

“High-net-worth individuals already get lower fees because they have sizeable deposits,” notes Middleton. “If they think fees are too high, they can get the bank to reduce them or take their big balances and go elsewhere.”

3. Read the fine print  Before opening any new account, make sure you read the fee disclosures, says Jill Enabnit, vice president in consumer products at U.S. Bank. Find out what charges you could face with the account, she says.

If the account pays interest but you won’t have a high enough balance to avoid monthly maintenance charges, the fee might eliminate any benefit from the interest you’d earn.

4. Focus on the banking relationship  The perks that come with senior checking are important, but it’s the ongoing banking relationship that can really help you maximize your money, Enabnit says.

So ask a bank representative what kind of deals you could get by having multiple accounts there, as opposed to just a senior checking account.

“You can get a lot of knowledge from bankers and they can help you get the most out of your accounts,” notes Enabit. “Let them suggest the best fit for your financial needs and help you reach your goals.”

Margarette Burnette is a veteran journalist who specializes in personal finance, parenting and real estate articles.

Photo Credit: Thinkstock

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