Free checking accounts -- whether offered by traditional banks or a new wave of digital and online-only portals -- represent a real boon to consumers. After all, bank customers weather fees in other parts of their financial lives, whether from out-of-network ATMs or from surcharges tacked on by e-commerce merchants and other online vendors.
An advantage to free checking accounts is that in this age of digital payments, they've become more versatile than ever. "They really have become a 'payments account' where most of the transactions processed through them are electronic; think direct deposit, debit card transactions, bill payments and Venmo transfers," says Carl Casper, executive vice president and chief operating officer of Connex Credit Union in Connecticut.
Regardless of the account's main use, "Where you maintain that one vessel that stores the money you use to transact your daily business is an important decision and one that need not come with a high monthly price tag," Casper says.
Even in this opportune niche, consumers need to exercise prudence. It's important to avoid monthly service charges or maintenance fees -- or institutions without a responsive customer service track record. The latter could present formidable obstacles when you need help reversing erroneous charges, for example.
But once you find the account that's right for you, it could open the door not just to a world of "free" but also to financial perks that extend the value of your checking choice.
"A free checking account is a good starting point, but one that comes with additional perks is even better," says Gary Zimmerman, CEO of MaxMyInterest, a cash management company. "Look for an account that offers a high or at least nonzero interest rate, air miles, ATM fee waivers, or other pecuniary rewards that show appreciation for you as a customer."
[Read: Best Checking Accounts.]
How Much Can Checking Accounts Cost?
The short answer is: a lot. Under certain circumstances, it's not out of the question to rack up as much as $40 a month in fees, which might include monthly service charges, below-minimum-balance fees and penalties for not using the bank to direct deposit your paychecks.
"Opening a checking account feels like a fairly standard practice, so it's tempting to overlook the fine print," says Katie Miller, senior vice president of savings products at Navy Federal Credit Union. "But that's where hidden fees and charges often linger. The onus is generally on consumers to assess which options work best for them. When reading the fine print, focus on how much -- and how often -- charges will arise."
Depending on the checking account you have at Citi, for example, monthly service fees run from $10 to $30. The fees can be waived, though, if you make direct deposits or keep a minimum balance in Citi accounts. Citi has three tiers where the minimums are $1,500, $10,000 and $50,000, including balances in linked accounts, such as savings or investment.
Nearly identical to Citi's most basic account, Chase Total Checking offers a basic package with a $12 service charge that's waived if you keep at least $5,000 combined in all linked accounts, maintain a $1,500 minimum in checking alone or have at least $500 directly deposited to the account monthly.
"You want to make certain that there are no service fees for routine things such as ACH withdrawals, checking balances or investigating disputes," says Morris Armstrong, founder and owner at Morris Armstrong EA, a tax preparation firm in Connecticut. "Make sure that how you use the account is how the account operates."
And for many consumers, convenience often ranks as important as zero fees -- while lack of functionality can yield charges seemingly from out of the blue. "If you make mobile deposits, the bank should have a good app," Armstrong says. "Be careful of anything that triggers a fee."
Such as this: "Beware the overdraft," says Michael Wesley, KeyBank senior group manager of consumer payments and rewards. Overdrafts "on free checking accounts, as with most checking accounts, also come with costly overdraft fees."
[Read: Best Savings Accounts.]
Best No-Fee Checking Accounts
Umpqua Bank Embark Checking
This Portland, Oregon-based bank's Embark Checking is one product responsible for this institution's loyal following. However, you need an address in California, Idaho, Nevada, Oregon or Washington to start an account. While there are no premiums for opening an account and it earns no interest, the suite of features on Umpqua's mobile app scores big points. Embark Checking account holders also receive a complimentary Grow Savings account. That's fee-free as well, provided you perform at least one transfer from checking per month, which could be as low as $1.
Free checking also means no monthly maintenance fees. A low initial deposit of $25 is all you need to get started; a balance of $2,500 or more qualifies you for $10 in monthly ATM rebates. Note that you will pay a $3 fee if you stick with paper statements; going paperless waives that charge.
Did you know? In September 2018, Umpqua rolled out a Tinder-like mobile app called Go-To. The pioneering app lets customers choose a banker based on professional background, expertise, personal interests and location.
USAA Bank Classic Checking
While only open to current or former members of the military and their families, USAA's Classic Checking is well worth it if you can start an account there. It comes backed by USAA's best-in-class customer service and offers overdraft protection when you link it to a USAA savings account or credit card. The opening deposit is $25, though there's no minimum balance after that. USAA Classic Checking also refunds up to $15 in nonnetwork ATM fees per month and has a network of more than 60,000 machines. You won't earn any money with this account, though, as it has a rock-bottom annual percentage yield of 0.01% and requires a balance of at least $1,000.
Did you know? In terms of Net Promoter Score, which rates how likely customers would be to recommend a business to a friend, USAA consistently finishes No. 1 of all U.S. financial institutions. In 2019, USAA earned a 68: double the banking industry average of 34.
Varo Money free checking
Branch-free Varo Money charges no fees in general for checking, along with no overdraft charges. Varo offers access to more than 55,000 ATMs worldwide through the Allpoint network and has no minimum balance requirement. Other perks include a Varo Visa debit card with free replacement, push notifications to alert you when your balance changes and credit on regular direct deposits up to two days before payday. While checking accounts don't earn interest, savings accounts earn between 2.02% and 2.8% APY, and transferring between accounts is easy.
Did you know? A newcomer to the digital banking scene, Varo Bank is also a history-maker as America's first mobile-only bank. It has gotten off to quite the start, too, having earned more than 22,000 five-star reviews on the App Store and Google Play.
[Read: Best CD Rates.]
Ally Bank Interest Checking
One of the pioneering online banks, Ally prides itself on straight talk devoid of banking jargon. Understanding its interest checking account couldn't be simpler: no minimums and no ATM fees. Interest certainly doesn't mean "high interest," as Ally offers 0.1% APY on accounts with less than a $15,000 minimum daily balance and 0.6% for $15,000 or more. But Ally eCheck Deposit allows customers to use their smartphones to snap pictures of checks and move them to their accounts, and Ally reimburses up to $10 per month for other banks' ATM fees. It also has a neat tech feature, Ally Skill, which allows you to access your checking account via Amazon's Alexa digital assistant.
Did you know? While an online bank, Detroit-based Ally traces its roots to 1919 and the auto industry. It began life as GMAC, the financing arm of General Motors and was reconfigured in 2009 -- at the height of the Great Recession -- as Ally Bank.
Capital One 360 Checking
Among the major U.S. banks, Capital One has one of the best free checking accounts going, with a network of about 500 branches and 39,000 fee-free ATMs standing behind it. A current promotion offers a $25 bonus for new account holders who deposit $250 or more and complete three debit card purchases or Zelle transactions. Online sign-up is fast (about five minutes) and while the APY is nothing to crow about -- 0.2% for accounts less than $50,000 -- 360 Checking does at least offer some type of return on top of its free platform.
Did you know? Capital One owns and operates Capital One Cafes, a new concept that combines a bank branch and coffee shop. Staffed by banking "ambassadors" instead of tellers and offering beverages provided by Peet's Coffee, the cafes are open to the public and located in major metro areas, such as Chicago, Los Angeles and Philadelphia.
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