Your Best Deals in Checking Accounts

A GREAT place to put your money is in a checking account that also earns interest. That's just what you get with money market accounts as well as NOW accounts. But they all have limitations, and the NOW accounts can be downright tricky when it comes to figuring minimum balances and interest rates.

The premium deposit for opening an account varies from bank to bank, but typically you need $1,000 to start a NOW account and $2,500 for a money market account. All banks used to require that you maintain balances of at least $1,000 if you wanted to earn the interest rates paid by money market deposit accounts. There was no minimum for NOW accounts at first. That was federal law until 1986. Since then, banks can require any minimum balance they wish, or no balance at all. Some banks continue to require the old minimum and sometimes more. But minimums for a NOW are commonly much less. Many banks give you interest on anything at all in your account.

But watch out: Most banks have monthly charges that can add up, especially if you are likely to keep only a small balance in your account.

When you shop around, the surest way to compare is to find out exactly how much money you will have in your account at the end of the year if you deposit, say, $100 on the first of the year. In any case, it's wise to call a half dozen banks and S&Ls and compare fees. When you are gathering information, be sure to ask how minimum balances are calculated and find out how much it costs if you slip under the minimum.

Your best buy in checking accounts depends on how much money you have and how many checks you write. For example, there's a non interest bearing account with no minimum and only a small balance required. Here are some of your choices:

If you write few checks, so called economy checking may be for you. It costs $2 to $3 a month, plus 20 to 25 cents per check. Or there's regular checking, with no minimum to open and costs of $5 to $6 a month. Usually you have to maintain a $500 minimum balance. Some banks will allow 15 to 20 free checks a month, so shop around. These accounts pay you no interest.

More advantageous is the NOW account. It usually takes $ 1,000 to open, and carries a $5 to $8 monthly fee avoidable if you keep your minimum balance at $ 1,000 or more. It will pay you 5% to 5 1/4% interest and most banks will give you 20 free checks a month.

There are two types of money market checking accounts, so you want to be sure which is better tailored for you. One is a transaction account, which costs $2,500 to open, usually gives you 15 to 20 free checks a month and charges you 25 cents per check after that. A monthly fee of $5 to $ 10 can be avoided if you keep $2,500 or more in the account. Interest paid by this account may be 5% to 5 1/2%, but it varies according to market conditions. At certain times, you may find that in some banks there is almost no difference in interest paid by the NOW and money market accounts.

The second kind of money market account is more of a savings account than a transaction account, though you'll be allowed to write three free checks a month. (Any more can cost you $10 a check.) You'll find this account more flexible than a certificate of deposit you can deposit and withdraw money at will. It has more or less replaced the old passbook savings account.