Who should open a free checking account?
A free checking account is ideal for people who:
- Keep a low balance: This is important because many banks charge a monthly fee unless you maintain a certain minimum balance in your account.
- Don’t want to pay a fee: Most free checking accounts don’t require any deposit — they’re just free. If you’re getting paid by direct deposit or have money coming in from somewhere, you can put it into the account and have it available.
- Build banking history: This will create a record in the ChexSystems database that other banks may use when evaluating whether to open an account for you.
- Pay bills online or with a debit card: You won’t need paper checks if you plan to pay bills electronically.
- Don’t want to write paper checks: Many people dislike writing paper checks and prefer debit cards or online bill-pay options.
What fees are waived in a free checking account?
There are various fees that are waived, including:
- Monthly maintenance fee: Free checking accounts usually don’t require a monthly minimum balance, so you won’t pay a fee for coming up short. However, some free checking accounts charge other fees — an excessive withdrawal fee, which can add more than a monthly maintenance fee.
- Minimum opening deposit requirement: This is the amount of money you have to put into the account when you open it. With free accounts, there usually isn’t one. For example, most online banks don’t require any opening deposit to open their free checking accounts.
- ATM withdrawal fees: Some banks will reimburse you for ATM fees when using out of network. Others don’t allow you to use other banks’ ATMs without paying fees. Both options can be difficult if your bank doesn’t have many ATMs near where you live or work.
- Free online bill pay: Free online bill pay is a service that lets you pay anyone or any company electronically through your bank’s website. Bill pay is convenient because you can send money to anyone with an email address or phone number. You don’t have to worry about writing out a check and mailing it on time to avoid late fees.
- Free check writing: In a free checking account, there is usually no fee for using the debit card or writing checks. If there is no fee now, the bank may charge you one in the future if you write a large number of checks each month. So keep an eye on your account to ensure that you aren’t charged more than $3 per month for this service.
What are some common checking account fees to beware of?
Each bank and credit union has different rules for checking accounts, but there are a few fees that tend to show up in many places, such as:
- Nonsufficient funds (NSF): If you overdraw on your checking account, you’ll be charged a fee for each transaction that overdrew your account. To avoid this fee, make sure there are enough funds in your checking account before making a withdrawal. You can also avoid this fee by signing up for overdraft protection that links your checking and savings accounts or line of credit.
- Withdrawal limits: Withdrawal limits may apply if you withdraw from your checking account using ATMs, online banking transfers, or teller transactions. There are two types of withdrawal limits: the number of times you can withdraw money from your checking account and the dollar amount of each withdrawal. For example, let’s say you have a checking account that has a limit of six withdrawals per month and a $500 maximum limit per transaction. Once you hit either one of these limits, your bank will charge a fee to your account. This fee varies by a financial institution and could be anywhere between $5 and $30 per transaction, depending on the bank.
- Overdraft fees: An overdraft occurs when you write a check for an amount more significant than what is in your checking account balance. When this happens, most banks will apply an overdraft fee to your account and may allow the debit to go through with insufficient funds (sometimes called “overdraft coverage”). Depending on the bank, overdraft fees can range between $20 and $35 per transaction. f you’re worried about overdrawing your account, try to find one that offers overdraft protection or has low fees.
What do you need to open a free checking account?
To open a checking account, you need to:
- Choose the type of account: The first thing you have to do is decide what type of checking account you want. Some accounts are designed for students or require a minimum amount of money to open. Others will charge you fees if your balance dips below specific amounts. You must choose the proper account for your needs.
- Provide identification: You need to show proof of your date of birth, such as your birth certificate, and other documents to prove your Social Security number. Additional documentation may be required depending on the type of account you want to open and the financial institution where you’re opening it.
- Find out how much money you need to open an account: Most banks require a minimum deposit when opening an account, but it can vary from bank to bank and even from account type to account type at the same institution. Make sure you know what amount is required before visiting the bank, so that you don’t waste time and effort if it turns out you don’t have enough money on hand to meet the minimum requirements.
How to choose the best free checking account
Here are some important features to watch for as you’re shopping around for a free checking account:
- Monthly maintenance fees: The best free checking accounts don’t charge a monthly fee, but there are other fees you might pay. ATM charges, foreign transaction fees, and overdraft fees can all add up.
- Minimum balance requirements: Some free checking accounts may require you to maintain a minimum balance to avoid paying a monthly fee.
- ATM access: If you’re likely to use your debit card often or need to withdraw money from an ATM frequently, you should choose an account with easy access to ATMs wherever you live, work, and travel.
- Mobile banking app: Many people manage their finances on the go with mobile devices, so you should evaluate which banks have the best mobile banking apps based on ratings from users in the Apple App Store and Google Play Store.
- Free online bill pay: Many banks now allow customers to set up automatic payments from their checking accounts, which will be sent directly to payees. Some banks charge for this service; others do not. It may not seem like a big deal, but once you’re used to online bill pay, going back to writing checks and putting stamps on envelopes will not be comfortable.