We hear ads for free or no-fee checking all the time, but are these accounts really free? There are four different account components to consider.
- Maintenance Fees – These are monthly fees that the bank charges you simply to maintain your checking account. Some banks list maintenance fees but allow them to be waived under certain conditions such as maintaining a minimum average daily balance.
- Minimum Deposit – The minimum amount of money that you must deposit to open an account. You may be required to maintain a different balance amount to receive other perks or benefits.
- Overdraft Fees – The fees incurred when you attempt to withdraw more money than you have in the account.
- ATM Fees – The transaction fees you are charged to use an ATM. Keep in mind that any bank can only control their component of the ATM fees. If you use a different bank's ATM, they may still apply charges even though your bank does not.
Most people think of the monthly maintenance fees when evaluating free checking, but it's important to look over all four aspects — as well as any limitations or conditions that apply.
Here are our choices based on recent information. It is possible that rates and policies have changed by the time you read this article, so verify fees with each bank before signing up.
- Simple Checking – Simple is a partner of the Bancorp Bank focusing on the Internet market. They offer a truly free checking account with $0 in all four fee categories and provide a corresponding debit card. The few fees they have relate to items like paper copies of your monthly statement or an inactivity fee for six months of inactivity (both of those are $5 monthly).
- Capital One 360 Checking – A checking account with $0 in all four categories and minimal limitations. You don't pay any overdraft fees but do need to pay interest on any overdraft amount. They do charge a stop payment fee of $25.00 but have benefits such as no foreign transaction fees and free online bill paying options. Interest is tiered depending on the account balance.
- Bank of Internet Rewards Checking – If you can handle a $100 initial deposit, there are no monthly fees or overdraft fees, and all domestic ATM charges are refunded. Features include a VISA debit card with cash-back purchase rewards by maintaining a large enough minimum daily balance.
You may prefer other checking accounts based on features that are important to you. For example, Internet banks offer most of the better checking account deals. That means that there may not be a physical branch near you — or any branches at all. If you have concerns about customer service or just have to speak to a live person, you may prefer trading fees for convenience.
You may be able to find other regional banks or credit unions that can offer free checking, and their offer may be as good, or even better, than the top choices listed above. All you have to do is compare all four of the fee categories of checking accounts and their rules and limitations, and you will be able to make the best choice for your banking needs.