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Banking 101: Free Checking Accounts

Written by Sarah Li Cain | Published on 4/22/2019

Note: This article is part of our Basic Banking series, designed to provide new savers with the key skills to save smarter.

For most people, a checking account is the banking product they use most. Given the wide range of options available today, there is no reason to ever pay fees for a checking account.

There are still so many kinds of free checking accounts available offering decent perks and excellent customer service that you’d be crazy to pay for fees for checking. You may think a few dollars here and there isn’t a big deal, but it can really add up, especially if you pay for ATM withdrawals or fall below a minimum daily balance requirement.

According to David Pommerehn, Senior Vice President and Associate General Counsel of the Consumer Bankers Association, banks aren’t incentivized to offer free checking accounts.

“Typical checking accounts cost banks nearly $300 a year to maintain,” he says. “While free checking accounts have been reduced significantly since the 2012 enactment of the Durbin Amendment, many banks still offer some form of free checking.”

If you’re paying fees now, now is the time to shop around for a free checking account without monthly maintenance fees, minimum balance requirements or third-party ATM fees. Depending on your needs, you can also look out for accounts with a low initial deposit amount.

Before signing up with any bank, read our advice on what you need to consider when looking for a checking account that suits your needs.

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Features to look for in a free checking account

Certain features will be more beneficial depending on what you intend to do with your account. But first, we’ll repeat ourselves and advise you to avoid any checking accounts that have monthly maintenance fees. There are banks and credit unions offering checking accounts that waive the monthly fee if you maintain a certain balance or activity like direct deposit, but there are plenty of options that don’t.

Ken Tumin, founder of DepositAccounts (a subsidiary of LendingTree), suggests that finding a free checking account can help your financial situation, especially when you can’t meet a minimum deposit requirement.

“The monthly fee may be easy to waive when times are good, but during difficult times like when you’re unemployed, the monthly fee may be difficult to waive,” he says. “That’s when fees really hurt.”

If you’re an active ATM user, there are many banks that offer ATM-friendly features such as unlimited ATM usage and no out-of-network fees.

“Consider looking for banks that offer ATM fee refunds,” Tumin says. “These are refunds of fees charged by ATM owners when you use ATMs that don’t belong to your bank or an ATM network.”

Even if a bank account doesn’t offer ATM fee refunds, look for banks that have a large ATM network. For example, many credit unions are part of the Allpoint network which has over 55,000 surcharge-free ATMs worldwide. You can check a bank’s website to see if they’re part of an ATM network and search for locations near you.

There are also banks that offer free paper checks. Some offer your first book of checks for free when you open a checking account, so check the fine print to see what’s being offered.

Should you pay for overdraft protection?

If you don’t keep enough money in your account, it could cost you in the form of overdraft fees.

An overdraft occurs when there isn’t enough money in your checking account to cover a purchase or payment, and the bank or credit union charges a fee to cover the difference. You’re typically charged a one-time fee per overdraft item. Some banks have a limit on how many overdraft fees it charges per day or month, but it’s still an unpleasant surprise when you do get slapped with a fee.

While it can be hard to avoid overdraft fees, you can opt for overdraft transfers to eliminate or reduce fees.

“With overdraft transfers, the bank will automatically make transfers from the savings account to the checking account to bring the checking account balance positive,” Tumin says.

Some banks and credit unions offer this for free while others do so at a lower rate than opting for overdraft protection. There’s also the option of not opting to have overdraft protection in the first place. Instead of paying a fee, your transaction will be denied if there’s not enough money in your account to pay for it.

Check out high-yield checking accounts

High-yield checking accounts can offer much higher rates than standard checking accounts and don’t charge monthly maintenance fees.

When looking for these types of accounts, check to see what requirements there are to qualify for the high APY. Tumin says that most banks reward account holders with a competitive rate up to a certain account balance, but also noted that it’s not the best place to earn the best yields.

“Even at online-only banks, the yields will typically be significantly lower than savings account yields,” he says. “It makes sense to choose a bank that offers both a high-yield free checking account and a top-rate online savings account.”

Look for checking account bonuses

If you’re going to sign up for a new fee checking account, you might as well get a bonus reward while you’re at it. It can be worth if it you’re considering opening the account for the long run and not just for the shiny bonus.

Tumin cautions, however, that you need to read the fine print carefully before signing up — if the sign-up bonus requires signing up for a checking account that comes with a bunch of fees, it could end up offsetting the amount you could earn.

Should you consider a rewards checking account?

A rewards checking account typically provides rewards such as cash back, online shopping credits or high interest rates.

While some rewards checking accounts don’t require minimum balance amounts or charge monthly maintenance fees, you may be subject to certain requirements. For example, you may be required to sign up for e-statements or use your debit card each month.

All this is to say that if you can meet the requirements, it could be worth it for the rewards. Otherwise, there are plenty of other checking accounts that offer competitive rates.

The free checking account bottom line

Banking doesn’t need to cost an arm and a leg. There are so many fee-free options out there that it’s worth taking a few minutes to compare your options online. Make sure to check the fine print for features you’re most interested in and choose a free checking account that best suits your needs.

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