What to Look for in a Free Checking Account

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Credit Sesame on what to look for in a free checking account.

It’s a little harder to find a free checking account now than it was in the early 2000s, but they’re far from rare.

If you are comfortable with technology, you may benefit from online banking – aka internet banking or web banking. This is a fast-growing sector within banking, with analysts predicting a 13.6% compound annual growth rate between 2020 and 2027.

Online banks have much lower overheads than traditional banks with expensive brick-and-mortar outlets and high staffing levels. So you may find especially good deals in that sector.

Before you choose the type of bank you want, decide on the account characteristics you want and need. What should you look for in a free checking account?

5 features you might want in a free checking account

Consumers have a variety of needs from their bank accounts. For example, some people have high balances and want to earn interest. These people may value good interest rates on savings accounts. Other people have low balances and are not as concerned about earning interest.

You may like a personal, face-to-face service while others prefer the speed and convenience of managing their money through their smartphones. People who travel a lot often want access to tens of thousands of in-network ATMs spread across the country or the world.

Take a moment to think through the things you personally find valuable. Let’s run through five of those things that you might or might not want.

1. A truly free checking account

There’s free and then there’s “free.” It’s not hard to find a bank that does not charge a monthly fee, but some waive that fee only in certain circumstances.

Often those circumstances revolve around your account balance. If you’re the sort who always maintains a high balance no matter what, you won’t be bothered by this. But if your balance frequently dips to low levels, you need to establish what triggers a fee and how often that’s likely to happen to you.

2. Attractive yields

You pay an annual percentage rate (APR) when you’re charged interest on money you’ve borrowed. But you receive an annual percentage yield (APY) when you get interest on your investments.

Nobody’s going to get rich on the yields currently offered by banks on checking or savings accounts. But there’s no point in throwing away money by settling for less than the highest yield you can find.

Naturally, this is going to be of particular concern to those who maintain high balances. If your balance is typically in the low hundreds, you’ll be lucky to get the price of a cup of coffee from your year-end yield. So, you might prioritize other features over the account’s yield.

3. ATM fees

A free checking account is only rarely free when it comes to out-of-network automated teller machines (ATMs). You’ll likely pay a fee every time you withdraw cash from one of those.

But not all banks are equal when it comes to this. A few may cover all your ATM fees. But most will charge you. 

If you live and work close to in-network ATMs, this won’t bother you, providing you don’t travel very often. Otherwise, these fees can vary from zero to $3 a pop, depending on your bank, according to Business Insider. And the out-of-network provider typically takes its own fee. So, don’t ignore ATM usage.

If your location or lifestyle makes this important to you, check your candidate banks’ policies on ATM fees before you commit. A few even refund a limited amount of those fees each month.

4. A bank you can work with

Don’t underestimate the importance of customer service when it comes to banking. Chances are you’ll barely notice it most of the time besides a cheery smile when you visit a branch or a helpful call-center agent. 

But, if you encounter problems, the last thing you want is to spend hours on hold and dealing with call-center associates who are not empowered to help you.

It’s tricky working out which banks have great and terrible customer service. Review websites inevitably have some negative comments for any organization with millions of customers. And those with gripes are more likely to post. But try to get a feel for how big a priority your candidate banks give to caring. And check their ratings on the Better Business Bureau’s website

If you are comfortable with an online service, take a look at your candidate banks’ smartphone apps and other consumer interfaces. Not all banks offer as much functionality and ease of use as others. 

5. FDIC cover

All traditional banks are FDIC insured. That means that, if your bank goes under, the Federal Deposit Insurance Corporation reimburses you up to $250,000 per depositor per insured bank. 

But the FDIC warns of some financial technology (fintech) companies that offer accounts without its protection. It says, “ … non-bank companies are marketing and offering fintech apps for accounts that may not be FDIC-insured.” If in doubt, use the FDIC’s information and support webpage or call 1-877-ASK-FDIC (877-275-3342).

Some fintech companies are FDIC insured. For example, the Sesame Cash account comes with full FDIC protections

To sum up

Different people need different things from their free checking accounts. So, nobody can say “this is the best free checking account.” That depends on what you want.

Use this guide to determine what’s important to you. And then invest a few hours in shopping around for your perfect banking partner. Don’t forget to read How to Open a Bank Account Online.

Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

Peter Warden
Peter Warden has been writing for 14 years about personal finance, credit cards, mortgages and insurance. His work has appeared across a wide range of media, and he is an editor at The Mortgage Reports. He lives in a small town with his partner of 30 years.

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