If your financial situation changes because of a job loss or pay cut, you should re-evaluate whether your current checking account still suits your needs. In particular, many checking accounts require monthly minimums to avoid fees. You should definitely change accounts if you’re paying monthly fees — there are tons of checking accounts available that do not require minimum balances to avoid a monthly service charge. This advice applies to most people: Over 55% of FABB users now claim their lowest daily balances are below $500 — that’s a 12% increase over the last 3 months (see the figure below).

Understand Whether Your Account Uses “Lowest Daily Balance” or “Average Daily Balance”

Most checking accounts use either ‘lowest daily balance’ or ‘lowest average balance’ to determine whether or not to assess a monthly fee. Here’s how it works: If you have a balance of $500 for 29/30 days in a given month and a balance of $1 for 1 day, your:

• Lowest Daily Balance would be $1.
• Average Daily Balance would be $483.36.

Background information and notes: FABB users answer questions to estimate fees of checking accounts in their search results. Since FABB was launched, over 62,000 people have answered these questions to compare checking accounts.

To save government money, banks in 30 states no longer mail paper checks and work with banks to offer recipients of unemployment benefits their alternative: check cards.

But the cost of processing these unique payments seems to be passed along to the unemployed, as extra bank fees apply to these cards in complicated ways.

Check out the full article here (AP) or read a shorter report and an accompanying video (NBC25.com).

From the articles we can gather some facts:

• There is a cost to grant check card holders access to their money and neither the government nor the banks wants to pay this cost.

• The government has set a minimum requirement–banks need to make the unemployed’s money accessible for free. Banks are complying by allowing the card holder to access their money once each month for free, either by teller or by one free ATM withdrawal (depending on the bank and the state).

• Banks make money on account activity after this initial use.

• Yes, it seems ironic that bailed-out banks are able to make money through fees and interest on these balances, but–

• There are measures unemployed people can take to avoid these charges.

While withdrawing the money all at once and putting it under your mattress or in a different checking account can help you avoid these fees, there is a clear alternative for someone who already has a checking account:

Set Up Direct Deposit.

States allow you to receive your check as a direct deposit into your checking account -– 54% of people receiving unemployment benefits already enroll in direct deposit. This avoids the unusual maintenance fees of the unemployment check card, and you will already be familiar with any sort of fees that may apply. It will take some paperwork to set up the direct deposit, but for those of us who need to watch every penny spent, direct deposit is the best choice.

Further Reading:

A list of 40 States that issue unemployment benefits through check card or are considering it.

An article by Monica Yant Kinney about the Hidden Cost of Unemployment Benefits in Philadelphia.

Finally, an AP article from Propeller.com–Meltdown 101: Some tips on collecting unemployment.