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What is a free checking account and how do you find the best one for your needs?

November 2, 2022, 6:06 PM UTC
Photo illustration of a woman holding a cell phone and using an atm machine.
Financial institutions are required to disclose all fees and charges associated with an account.
Photo illustration by Fortune; Original photo by Getty Images

When you’re preparing to open a new checking account, there are many options to consider. Among the choices available are free checking accounts, which typically do not include monthly maintenance fees. 

No one likes paying bank fees since it takes a bite out of the money in our account, so this can be an appealing and financially savvy option. But before selecting a free checking account it’s important to understand exactly what the account includes—and does not include—and what specifically is meant by “free.”

What is a free checking account?

Free checking accounts typically do not charge monthly maintenance and transaction fees or impose minimum balance requirements. These accounts are typically offered by brick-and-mortar banks, credit unions, and online-only financial institutions.

The specific fee schedule for free checking accounts is likely to vary somewhat from one financial institution to another, but according to U.S. laws, banks are not allowed to promote an account as “free” if maintenance or activity fees are applied.

The Office of the Comptroller of the Currency (OCC) explains that banks “can offer a free account and still charge for certain services,” however. These charges could include fees associated with using your ATM or overdraft fees, among other things.

Are free checking accounts truly free?

Generally, yes. But it’s important to understand that “free” doesn’t necessarily mean there will be no fees whatsoever associated with the account.

“Just because a checking account is advertised as free doesn’t mean it doesn’t have fees,” explains Brian Milton, head of banking at Thrivent, a not-for-profit financial organization that provides insurance, banking, and investment services. “Some banking institutions may offer accounts without a monthly fee but charge for a variety of activities—such as falling below a certain balance, receiving paper statements, or using ATMs outside of a specified network.”

Financial institutions are required to disclose all fees and charges associated with an account. But it’s up to you to review the account disclosures and agreement when you establish an account.

“Depending on which institution you open a free checking account with, there still could be hidden fees. Be sure to do your research prior to opening a free checking account and understand what fees are associated with your account,” says Steve Sexton, CEO and founder of Sexton Advisory Group, a financial services firm offering wealth management and financial planning guidance.

Pros and cons of free checking accounts to consider 

There are many upsides to free checking accounts, the most notable of which is keeping more money in your pocket. But you’ll also want to consider the trade-offs that come with this type of account, as they may be bare bones accounts that offer little in the way of services or they may implement additional fees for services. Here’s a closer look at some of the potential benefits and drawbacks to consider.

Pros

  • No monthly maintenance costs: First and foremost, free checking accounts should not include monthly maintenance fees. “While you might still be charged other fees, a free checking account offers the benefit of no monthly maintenance cost,” says Sexton.
  • No minimum balance: In many cases, free checking accounts also do not require that account holders maintain a minimum daily balance. “Average big banks will often charge you a fee if your checking account dips below their minimum balance. You won’t have to worry about this when it comes to most free checking accounts,” says Sexton.
  • No ATM withdrawal fees: Depending on the financial institution, freedom from ATM fees, such as out-of-network fees, may be another perk. “Most free checking accounts offer access to a network of free ATMs, which can save you money on hefty fees in the long run,” explains Sexton.

Cons

  • Minimum debit card usage: Some financial institutions may require that you use the debit card associated with an account a minimum number of times per month in order to avoid fees.
  • Opening deposit requirements: It’s not unusual for financial institutions to require minimum opening deposit requirements, such as $50 or more.
  • Direct deposit: In addition to requiring a minimum deposit to open, some free checking accounts also stipulate that you have a certain number of direct deposits to the account each month.

“There’s no shortage of monthly fee-free checking accounts out there, so the key is finding the one that best meets your needs,” says Milton. “It might require a little bit of research on your part. An internet search can be helpful, especially if you’ve outlined some key features that you can use as part of your search.”  

Are there special qualifications to open a free checking account? 

The requirements to open a free checking account may vary depending on the type of financial institution you’re considering. Credit unions, for instance, typically require that you meet certain qualifications in order to become a member and open an account. Traditional banks and online lenders generally do not have such requirements.

You’ll also be required to provide a variety of documentation to establish the account. This typically includes documentation of identity such as a Social Security number, driver’s license, or other official government identification. A birth certificate or passport may also be required. You will also be asked for information documenting your address, which could be a mortgage, a utility bill, or a rental lease. Some banks may also have age minimums to open accounts, such as being at least 18 years old. 

In addition, some financial institutions require a minimum deposit to open an account.

How to choose a free checking account

As you search for the right free checking account for your needs, consider a number of variables and questions before making a final decision:

1. Review fees

While the account may be presented as “free”—as in, there’s no monthly maintenance charge—it’s important to specifically ask about or read the fine print on the financial institution’s website regarding other fees associated with the account. You’ll want to find out whether there are ATM usage fees, wire fees, stop payment fees, and returned check fees, to name a few. Make sure you consider all of these costs to determine whether the account truly makes sense for your budget and lifestyle.

2. See what benefits come with the account

It’s not unusual for bank accounts to provide helpful financial management tools that can help you stay on top of your day-to-day spending. But bare-bones accounts may not offer such extra benefits.

“Before you start looking for a new checking account, spend some time thinking about what features might be important to you now or in the future,” says Milton. “For example, do you need tools that help you manage your cash flow? Some checking accounts offer helpful features in case things don’t go exactly as planned and help you make more informed spending choices.” 

3. Research the types of customer service options available
Having easy access to customer service is critical when it comes to managing your money or in the case of fraud or any other needs. Check the financial institution’s website to find out what type of customer service is available with your account.

4. Research how much ATM access you will have 

Having a robust ATM network available to access your account is a particularly important convenience factor, especially if you make frequent cash withdrawals or regular deposits. In some cases, the bank, credit union or financial institution offering the free checking account may partner with other providers to broaden the ATM network that its customers are able to access without a fee. But it’s important to specifically ask about this before selecting an account.

5. If everything checks out: Open an account 

Once you’ve sorted through all of these questions and any others that are important, it’s time to confirm your eligibility with the specific financial institution you’ve chosen and open the account. To complete this step, make sure to gather all required documents together. In many cases, you can open an account online. But for some traditional banks, you may need to visit the bank in person.

The takeaway

Free checking accounts can be a smart move to keep more money in your pocket and help you build wealth. But it’s important to remember not all free checking accounts are created equal. 

Before settling on one, take the time to shop around and review all the account options available. Once you’ve found a financial institution you’d like to work with, read the fine print regarding fees before officially opening the account.

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