Best Checking Accounts with Focus on Features Rather Than Rates

With rates so low these days, the interest rate of a checking account may not be a priority for some people. The features of the checking account may be more of a priority. This might be especially important this year as large banks start to add monthly service fees to their free checking accounts. So I thought it would be useful to review some of the best checking accounts from internet banks with the focus on features rather than rates. To be included in this list, the checking account has to have no minimum balance requirement and no monthly service fees. Also, it has to provide free paper checks and free ATMs.

Here's my quick review of 3 top internet checking accounts:

• Schwab Bank High Yield Investor Checking used to have high yields, but now it only pays 0.25% as of 1/13/2011. Even without the high yield, the checking account still has the no ATM fees and no monthly service fees. In addition to unlimited ATM fee rebates, there's also no currency exchange fee when you use the ATMs overseas. To open the checking account, you first have to open the Schwab One Brokerage Account. Schwab's electronic funds transfer (ETF) system is called MoneyLink which allows you to link external accounts and make online ACH transfers.
• Ally Bank's Interest Checking offers the best interest rate compared to the other two banks, but you need at least a $15K balance to earn this top rate. Ally doesn't yet have remote deposit service, but it does provide postage paid envelopes. Ally has a solid bank-to-bank transfer service which makes it easy to pull funds from a local bank.
• USAA Bank is one of the few internet banks that offer remote check deposits using either your PC (Deposit@Home) or smart phone (Deposit@Mobile). Although anyone can qualify for its Free Checking account, to qualify for remote deposit, you must be eligible for USAA property and casualty insurance which means that you must have a military connection. USAA does offer Easy Deposits which allows free check deposits through participating locations of The UPS store. You can also use USAA's bank-to-bank transfer service to pull funds from a local bank.
  
  One thing to note about USAA's free ATMs, it's not unlimited. USAA does not charge a fee for the first 10 ATM withdrawals and refunds up to $15 in other banks' ATM usage fees each month. A 1% foreign transaction fee applies to withdrawals outside the U.S.

Other Online Checking Accounts

If you don't care about free paper checks and unlimited free ATMs, ING Direct's Electric Orange, Alliant Credit Union's High Rate Checking and Incredible Bank should be considered. You can see how Electric Orange compares with Ally's Interest Checking in my Ally vs ING Direct Checking post.

Reward Checking Accounts

If high rates for your checking is a priority and you don't mind using a debit card, reward checking accounts should be considered. These may not have all the features of these internet checking accounts, but most do offer ATM fee reimbursements if you meet the monthly requirements. The vast majority of reward checking accounts are free. There are no monthly service fees even if you don't meet the requirements to qualify for the high rate and the ATM fee reimbursements. These accounts are also good choices if you want to support your local community bank and credit union. You can compare rates and features of reward checking accounts that are available nationwide and in your state in our reward checking table.

Debit Card Users with Small Savings

For those who like to use a debit card but don't keep large balances in the checking, you might want to consider PerkStreet Financial. It offers top cash back rewards for your debit card.

Edit 1/14/11: Clarified the $15K requirement at Ally