Best Checking Accounts for July 2020 | Bankrate.com

Best Checking Accounts of July 2020

Tuesday, July 14, 2020

Best checking accounts 2020

Here are Bankrates picks for the best checking accounts

Best Checking Accounts for July 2020

  • Best overall rate: Heritage Bank
  • Best for no fees: Simple
  • Best for no/low fees: nbkc bank
  • Best for mobile app and high yield rate: Ally
  • Best for high intro APY: TIAA Bank
  • Best for unlimited ATM fee rebates: Radius Bank
  • Best rate for no minimum balance: Capital One
  • Best for sign-up bonuses: Chase Bank
  • Best for cash back: Discover Bank
  • Bankrate's Methodology

    At Bankrate, we strive to help you make smarter financial decisions. We follow strict guidelines to ensure that our editorial content is unbiased and not influenced by advertisers. Our editorial team receives no direct compensation from advertisers and our content is thoroughly fact-checked to ensure accuracy.

    Bankrate regularly surveys widely available financial institutions, made up of the biggest banks and credit unions, as well as a number of popular online banks. To find the best checking accounts, our editorial team analyzes various factors, such as: fees, minimum balance requirements, and annual percentage yield (APY) offered. All of the checking accounts below are insured by the FDIC at banks or the NCUA at credit unions.

    Bankrate's guide to checking accounts

    The experts at Bankrate have put together a quick guide on choosing the best checking account. Be sure to read the information below so you can make a financially sound decision.

    Banks with best checking accounts for July 2020

    Best checking account for overall rate: Heritage Bank eCentive checking account, 1.46% APY (on qualifying balances of $0.01-$25,000)

    Balance to open: $100

    Pros: The 1.46 percent APY on the eCentive checking account applies to qualifying balances up to $25,000. To earn the APY, you will need to make at least 10 debit card transactions per month (excluding ATM transactions), get at least one direct deposit per month and receive monthly eStatements. There are no monthly service charges and no minimum balance requirements. Customers can access information via the bank's app, the mobile browser or through text inquiries and alerts. Online banking customers can also make person-to-person payments using Popmoney. The bank refunds up to $25 a month in ATM fees. The bank's "hybrid" ATMs also let customers interact with live video tellers during certain hours.

    Cons: If you don't make 10 debit card transactions per month, you'll only earn 0.05 percent APY. If you don't sign up for eStatements, you'll be charged $4 per month to have paper statements mailed to you. Heritage Bank has locations in just seven cities across Minnesota, Iowa and South Dakota. Overdrafts and non-sufficient funds cost $33 per paid item; $36 per returned item. If you close the account within six months of opening it, you'll pay a $30 exit fee. Qualifying balances of $25,000.01 and greater only earn 0.46 percent APY.

    Best checking account for no fees: Simple Individual Checking, 1.00% APY

    Balance to avoid fees: $0

    Pros: Simple charges only one fee: $5 for a book of 25 checks. The mobile app lets you deposit and transfer money, link to external accounts and block your card if it's lost or stolen. The app also includes budgeting tools that help you track your spending and save for goals. The goal money goes into a separate account that earns 1.00 percent APY.

    Cons: Simple doesn't offer bill pay, but you can set up payments at creditors' websites. Be on the lookout for fraud by regularly checking your app. In the event of fraud, if you processed your card as credit, you won't be liable as long as you notify Simple within two business days, after which you could be on the hook for up to $500. With debit transactions, you'll owe as much as $50, but you must report the fraud within two days. These protections don't apply to ATM transactions or those processed outside the Visa network.

    Best checking account for no/low fees: nbkc bank Personal Account, 0.65% APY

    Balance to open: $5

    Pros: There are no fees for overdrafts, returned items, stop payments, cashier's checks and other services. The opening deposit is low ($5) and you only need a penny in the account to earn interest. You can set up recurring bill payments online, and your smartphone can be used to make mobile check deposits. Customers can access 32,000 MoneyPass ATMs for free across the country. The bank reimburses up to $12 a month for ATM fees that other banks may charge.

    Cons: Outgoing domestic wires cost $5. International wires, whether sending or receiving them, cost $45.

    Best checking account for mobile app and high yield rate: Ally Interest Checking account, 0.10% to 0.50% APY

    Balance to open: $0

    Pros: There are no monthly maintenance fees on the Interest Checking account. The rate is tiered based on your account balance and interest compounds daily. Ally's mobile app lets you access your account 24/7 to check balances, find ATMs, pay bills and conduct other banking business. On the app, you can also establish card controls and send money to people you know through Zelle. Ally provides generous ATM access. Thanks to its partnership with Allpoint ATM network, you can use 43,000-plus ATMs nationwide for free. Ally also reimburses up to $10 a month for out-of-network ATM fees charged by other banks.

    Cons: You must maintain a $15,000 balance to earn the highest APY. Customers must fund the account within 30 days or it will be closed. Watch out for some fees, such as $20 for outgoing domestic wires and $25 per day for overdrafts (though Ally is lenient with a first offense). Overdraft fees can be avoided by enrolling in overdraft protection and linking to an Ally savings or money market account.

    Best checking account for high intro APY: TIAA Bank Yield Pledge Checking, 0.40% APY (1-year intro APY)

    Balance to open: $100

    Pros: The Yield Pledge Checking's one-year introductory rate of 0.40 percent APY is for new customers. After the introductory period ends, the variable rate currently ranges from 0.15 percent APY to 0.25 percent APY, depending on the account balance. TIAA guarantees that its yields will be in the top 5 percent among its competitors. There is no monthly fee, regardless of balance. Customers get benefits with the debit card, including extended warranty protection on eligible purchases of up to one year; 60-day price protection with reimbursement for the difference between the purchase price and advertised price on eligible items, up to $250; and up to $250 for buyer's remorse or dissatisfaction within 90 days of purchase if the merchant won't accept the return. TIAA Bank’s digital services let you track and manage your accounts, pay bills, transfer money and send money to people you know through Zelle. Its nationwide network of 80,000 ATMs are fee-free. If you use an out-of-network ATM, you'll be fully reimbursed for ATM fees if you maintain an average daily balance of $5,000. Otherwise, the bank reimburses up to $15 a month.

    Cons: There are fees for non-sufficient funds ($30), returned deposited items ($10), stop payments ($25), expedited overnight bill payments ($14.95), cashier's checks ($10) and others.

    Best checking account for unlimited ATM fee rebates: Radius Bank Rewards Checking, 0.10% to 0.15% APY

    Balance to open: $100

    Pro: Rewards Checking customers earn 1 percent cash back on signature-based purchases each month. Philanthropic types might go for Radius Bank's Superhero Checking, which earns 0.05 percent APY on balances of $2,500-plus, and the interest is matched by Radius and donated to the March of Dimes. Superhero also offers 1 percent cash back on purchases, with the proceeds going to charity. Both checking accounts only require a $100 opening deposit and there are no monthly maintenance fees. Rewards and Superhero Checking customers get one free order of checks and unlimited ATM fee rebates. The Radius mobile app enables users to manage their accounts, make payments and transfers, plus it offers tools to create budgets, view spending and track trends. You can add your Radius debit card to Apple Pay, Google Pay or Samsung Pay.

    Cons: You must maintain an average daily balance of $2,500 to earn interest on checking and get the 1 percent cash back on signature-based purchases. Customers can sidestep the balance requirement with a direct deposit of at least $2,500 each month. Among the fees: $25 for non-sufficient funds, $25 for a returned item (like a check), $25 for a stop payment, $20 for a domestic outgoing wire, $10 for an incoming wire, and $40 for international outgoing wires. If you are overdrawn for more than five days, there is a daily fee of $5 for up to 30 days.

    Best checking account for no balance requirements: Capital One 360 Checking, 0.10% APY

    Balance to open: $0

    Pros: The checking account is very accessible: While no minimum balance is required, an account is not considered opened until it's funded with at least a penny. The 360 Checking is free of monthly maintenance fees and the first 50 checks are free. Capital One's mobile app lets you manage accounts, make deposits using your smartphone and receive account alerts. The online bank also supports branches and cafe-style locations.

    Cons: Fees are charged for services such as cashier's checks ($20), stop payment on a paper check ($25) and outgoing domestic wire transfers ($30). Capital One also charges for non-sufficient funds ($9) and overdraft fees (up to $35 per transaction) unless you link your checking account to a savings or money market account. In 2019, Capital One had a major data breach in which accounts and applications, mostly credit card applications, of more than 100 million customers in the U.S. and Canada were exposed. The bank said it fixed the breach and offered free credit monitoring and identity protection to affected customers. Checking account customers must agree to go paperless and accept all communications via electronic delivery.

    Best checking account for sign-up bonuses: Chase Total Checking and Chase College Checking; Chase Premier Plus & Sapphire Checking, 0.01% APY for Sapphire and Premier Plus checking

    Balance to open: Varies according to location

    Pros: Chase offers several checking accounts with different sign-up bonuses. A $200 cash promotion is available through July 20, 2020, to new Chase customers who sign up for Chase Total Checking with direct deposit from an employer or the government for at least six months. New customers can also get $100 by opening a Chase College Checking account by July 9, 2020 and completing 10 qualifying transactions. Chase customers have access to more than 5,000 branches nationwide,16,000 ATMs, and highly rated digital banking tools.

    Cons: Customers earn a paltry 0.01 percent APY on most accounts. The only exception pertains to "relationship rates" for Chase Premier Savings customers who link that account to a Premier Plus or Sapphire Checking account and meet certain transaction requirements. The relationship rates are tiered based on account balance and they are also meager, ranging from 0.02 percent APY for balances up to $49,999 and 0.05 percent APY for balances above $250,000 up to $10 million-plus. The more elite checking accounts require high minimum balances to avoid a $25 monthly fee. For instance, Chase Premier Plus Checking requires an average daily balance of $15,000 among linked Chase accounts or a Chase first mortgage enrolled in automatic payments. To dodge the monthly $12 maintenance fee on the Chase Total Checking account, you need a daily balance of $1,500 with a monthly direct deposit of at least $500 or a daily balance of $5,000 among other Chase accounts. Total Checking customers pay fees for out-of-network ATM transactions and are penalized $34 for overdrafts, though Chase is lenient with occasional offenders.

    Best checking account for cashback: Discover Cashback Debit, 0% APY

    Balance to open: $0

    Pros: Known mostly for its cash-back credit card rewards, Discover extends the rewards to its online checking accounts. Discover's Cashback Debit account offers 1 percent cash back on up to $3,000 in debit card purchases each month, or potentially $30 a month. These funds can be automatically deposited into a Discover Online Savings account, currently earning 1.15 percent APY. No minimum balance is required to open the checking account, but it must be funded within 45 days or the bank may close it. Discover Financial Services claims "No. Fees. Period." Customers pay no fees for returned checks, overdrafts, stop payment orders, non-sufficient funds, new checks or expedited delivery for debit card replacements. Customer service reps are available 24/7. Customers have access to more than 60,000 no-fee ATMs in the U.S. A mobile app that enables you to make deposits or freeze your debit card if you misplace it can be downloaded from the App Store or Google Play.

    Cons: Discover only has one full service brick and mortar office, and that’s located in Delaware. So you’ll need to like using its website, its mobile app or its customer service phone number to bank and have your questions answered.

    Checking account interest rate requirements

    Before you choose an interest-bearing checking account, pay attention to the requirements you must meet to earn the highest yield. You may need to set up direct deposit, enroll in eStatements and/or make a certain number of debit card purchases each month.

    If you can't meet the criteria to qualify for one of the best checking account rates, consider opening a high-yield CD instead.

    What to know about checking accounts

    What is a checking account?

    A checking account is a type of financial tool that offers everyday access to your money. These accounts typically come with personal checks and a debit card. And, there's no limit to how often you can use your money. You can withdraw, transfer, write checks, make debit card charges and deposit money as often as you'd like.

    In recent years banks have expanded their checking account services to include online and mobile banking. With checking accounts, there's no limit to how often you can access your money. Unlike savings accounts, you can withdraw, transfer, write checks, and make debit card charges as often as you'd like.

    Virtually all banks and credit unions offer checking accounts. To clear checks and transfer funds, banks use Automated Clearing House, or ACH, a nationwide network operated by the two national ACH operators – the Reserve Banks and the Electronic Payments Network. Checking accounts are typically easy to set up with a small deposit. If they earn interest at all, it tends to be less than savings and money market accounts. But checking accounts offer the same level of safety. Like savings and money market accounts, checking accounts are insured up to $250,000 by the Federal Deposit Insurance Corp. (FDIC) or by the National Credit Union Share Insurance Fund, depending on whether your account is at a bank or credit union.

    Why sign up for a checking account

    Because of their accessibility and safety, checking accounts make for a good financial hub — a versatile account that can be used to pay bills, make purchases and receive deposits.

    Checking accounts can simplify your financial life. For example, you can set up your checking account to receive automatic deposits from your employer and make automatic withdrawals to pay your bills. Mobile apps enable you to make payments, transfer money and review your transaction history on the go.

    What should I look for in a checking account?

    A checking account offers easy access to your money and makes paying bills a breeze. But you don't want bank fees to whittle away at your balance.

    When shopping for a checking account, look for:

    • No or low fees
    • No minimum balance requirement
    • Free access to ATMs
    • Online and mobile access

    Earning interest is another account perk that you might want to add to the list. While some banks offer interest-bearing checking accounts, customers often have to meet certain requirements to earn the highest yield. You may need to set up direct deposit, enroll in eStatements and/or make a certain number of debit card purchases each month. Some banks that offer attractive interest rates, however, require a high average daily balance to qualify. You might be better off putting your money in a high-yield savings or money market account. Be sure to read all the terms pertaining to a checking account before signing up.

    Benefits of opening a checking account online

    Online checking accounts can offer several advantages over accounts at traditional brick-and-mortar banks. Online banks have low overhead costs, which means they are able to return those savings to their customers in the form of higher rates and reduced fees. In some cases, online banks offer a wider selection of digital features than traditional banks to help you manage your money on the fly.

    Are checking accounts free?

    "Free" checking accounts don't charge you a monthly fee or have a minimum balance requirement to open the account. Many financial institutions waive the monthly maintenance fee to generate business, but other fees may be imposed, such as for non-sufficient funds (NSF), account inactivity and wire transfers, to name a few. You can find free checking accounts. Bankrate's 2019 checking and ATM survey found that 42 percent of checking accounts at larger banks are free. They are far more common at community banks and credit unions. Another Bankrate survey found that 82 percent of large credit unions offer free checking. But it's still wise to watch for fees. Banks and credit unions offering free checking accounts will still charge for things like overdrafts, which can easily cost $30 or more.

    Checking accounts with no fees

    Few banks charge no fees whatsoever, but there are some that come close. If you are looking for a checking account that doesn't charge fees, take heart: Several banks in our best checking accounts list above charge no fees or very few fees. Discover, for example, charges no fees on its Cashback Debit checking account. Nbkc Bank (National Bank of Kansas City), a community bank, features a long list of fees it does not charge: There is no fee for overdrafts, stop payments, cashier's checks and other services. Simple offers a checking account with only one fee for a batch of checks. All other services are free. Ally is another fee-friendly financial institution, although it does charge fees for wire transfers and account overdrafts. Many banks don't charge a monthly checking account maintenance fee, but other services come with a cost. So, when it comes to fees, consider your banking habits and which fees you might be vulnerable to. If you use out-of-network ATMs, for example, look for an institution that doesn't penalize you for those transactions or reimburses you for ATM fees. Read the fine print of the checking account details and the institution's fee schedule to avoid surprises.

    Can checking accounts earn interest?

    Checking accounts haven't traditionally paid interest, but many banks and credit unions now offer high-yield checking account options.

    These accounts earn interest that compounds at least once per year. However, they often come with some caveats. For instance, you may have to maintain a minimum or maximum balance, and use your debit card a certain number of times per month in order to earn the interest rate.

    In addition, high-yield checking accounts typically pay a lower rate than savings accounts.

    How are checking accounts insured?

    Checking accounts, like savings and money market accounts, are insured at banks up to $250,000 by the Federal Deposit Insurance Corporation (FDIC), and up to the same amount at credit unions by the National Credit Union Administration (NCUA).

    Are checking account deposits safe?

    Even if your bank or credit union goes belly-up, your deposits up to the $250,000 FDIC/NCUA limit are safe. Some institutions provide additional insurance coverage exceeding that amount. FDIC-insured online banks, too, are every bit as safe as brick-and-mortar banks up to that limit. Plus, digital banks often feature better terms and lower fees since they don't have the overhead and operational costs associated with multiple branches.

    How is interest taxed on a checking account?

    Interest earned on savings and checking accounts are taxable at ordinary income tax rates, which range from 10 percent to 37 percent.

    How many checking accounts can I have?

    While there is no limit to the number of checking accounts you can have, it's generally not practical to have more than one per person, and perhaps as many as three in a household if a couple would like to have a joint account plus individual accounts. In addition, a separate account for business helps to track business income and expenses separately from everyday household expenditures.

    What is overdraft protection?

    Banks provide this service to cover purchases that you can’t pay for due to a too-low account balance. But signing up for overdraft protection may not be a great idea. Sure, you won't have to pay a NSF fee and the bank will cover the funds, sparing you the embarrassment of watching your debit card be declined. But you'll get hit with a fee, commonly $35 per item overdrawn. Some banks waive the fee for infrequent offenders, and others simply decline the transaction. But rather than opting into overdraft protection, see if you can link another account, such as a savings account to your checking account so funds can be automatically transferred as needed. Or inquire about an overdraft line of credit with a low interest rate if one is available.

    What do all the checking account numbers mean?

    Routing Number

    Along the bottom of your checks are three sets of numbers. The first nine digits, between symbols resembling colons, are the routing numbers. They identify the financial institution associated with an account and are often prominently displayed on the institution's web page. You need these numbers to set up direct deposits or automatic payments.

    Account Number

    To the right of the routing numbers is the account number, which is unique for each account holder.

    Check number

    The last set of numbers reflects the check number, which you'll also find on the top right-hand corner of a check.

    Will a checking account build or hurt your credit?

    The short answer is no, a checking account won't hurt your credit, with a couple of exceptions. Banks might check your credit report when you open a checking account, but this is considered a "soft inquiry," which will not affect your credit score. If you sign up for overdraft protection, however, this results in a "hard inquiry," which might dock your score by five points or so. That's because overdraft protection is considered a line of credit, much like a credit card.

    The credit bureaus may ignore your banking behavior, but it is being closely monitored by such companies as ChexSystems, a national consumer reporting agency that provides banks with reports about any blemishes on an account applicant's banking history. A record of bounced checks, unpaid fees and other slip-ups can make it difficult to get approved. But some banks offer second-chance checking accounts for those who need a fresh start. These accounts can help you rebuild your banking history, but often don't come with all of the perks of a regular checking account.

    What is a fresh start checking account?

    Fresh start checking is for those who have been turned down for a checking account because of banking mistakes. If your name has been put on a list by the consumer reporting agency ChexSystems, these types of checking accounts can be a great option.

    Often found at community banks and credit unions, fresh start accounts can help you rebuild your banking history. But they don't come with all of the services of a regular checking account.

    Fresh start accounts generally have a monthly fee that can't be waived attached to them. And they may come with additional requirements, depending on the institution with the account.

    The upside to these accounts is that if you're able to demonstrate solid money management skills over several months, the bank may allow you to upgrade and open a regular checking account.

    Checking vs. Savings accounts

    Both checking and savings accounts can be found at banks, credit unions and community banks. The relatively recent adoption of online and mobile banking allows seamless transfers from one account to another. But checking and savings accounts differ in important ways.

    How does a checking account differ from a savings account?

    Checking Account Savings Account
    Purpose Checking accounts are for everyday use: paying bills, buying groceries, debit card transactions. Savings accounts are for stashing cash for emergencies, large purchases and longer-term goals.
    Accessibility Offer unlimited withdrawals. Are limited to six withdrawals per month. There are some exceptions.
    Flexibility Offer several methods for spending the money, including debit cards, paper checks, mobile apps and third-party payment services, such as Zelle. They are less flexible. Many accounts don't come with check-writing. Some do come with an ATM card, but not all of them.
    Earnings Often do not pay interest and if they do, the yield is paltry. Are more likely to be interest-bearing and the yields are better

    Calculate potential savings with a high yield savings account

    High-yield savings accounts are used for emergency funds and storing savings for future events. They pay a yield that’s higher than average, allowing savers to reach their financial goals faster.

    Use this free savings calculator to estimate your investment growth over time. With this growth calculator, you can set a goal and figure out how much you need to save each month to hit the mark.

    What to look for in a checking account

    Bonuses

    Some banks will pay you hundreds of dollars to get you to open a checking account, but these bonuses usually come with strings attached. For instance, Chase will pay $200 to new customers who open a Chase Total Checking account, but they must set up direct deposit of a paycheck, pension or Social Security benefit and keep the account open for at least six months. Bankrate can help you find the best bank account sign-up bonuses.

    Rewards

    Some banks will offer cash-back rewards, but these can require a sizable minimum balance. One notable exception is Discover Bank, which doesn't impose balance requirements and pays out 1 percent cash back on up to $3,000 in debit card purchases each month.

    No fees

    Bankrate's recent survey found that 42 percent of non-interest bearing accounts don't charge monthly service fees and impose no balance requirements. The majority of non-interest accounts will waive fees under certain conditions, such as direct deposit. Challenger banks, like Chime and Current, also offer no-fee accounts.

    Potential obstacles to opening a checking account:

    Checking accounts typically have some general requirements. And if you don't meet them, it can be difficult to open an account.

    • Age:

      It's typically difficult to get a checking account under age 18. That said, opening a joint account or a custodial account can be an option for minors.

    • Identification:

      Most banks and credit unions require two forms of identification to open an account — a Social Security card, passport, state ID or driver's license.

    • Minimum deposit:

      The minimum deposit to open a checking account is typically around $25 or more, although there are some accounts that allow for less.

    • Address:

      You'll need to provide proof of address when opening an account. Utility bills, lease agreements and insurance cards can work well for this.

    What to know about minimums and fees

    It's important to be aware of minimums and fees when opening a checking account. Here's an explanation of the different types of minimum requirements and fees you may face:

    • Minimum balance to open: Otherwise known as an opening deposit, this is the minimum amount of money required to open a checking account. This minimum is often $25 or more. However, it's possible to find some accounts that require no minimum to open.
    • Minimum balance to avoid fees: Many checking accounts require that you keep a minimum balance in the account in order to avoid the monthly maintenance fee. This minimum requirement can range anywhere from $250 to more than $1,500. Often, as long as you maintain the monthly minimum, the bank will often waive the fee.
    • Monthly fees: Checking accounts frequently charge a monthly fee for "maintenance." These fees can add up to $100 or more per year. In order to get the fee waived, you may need to meet the bank's minimum balance requirement, enroll in direct deposit or even open a savings account.
    • ATM fees: Banks normally charge for using your checking account's debit card at non-network ATMs to withdraw money. These fees generally range anywhere from $2 to $5 (or more at international ATMs). But there are some banks don't charge for non-network ATM use, and some will even reimburse you for non-network ATM fees.

    Highest Checking Account Rates of July 2020

    Bank Checking Accounts APY Monthly Fee
    Heritage Bank eCentive Checking 1.46%* $0
    Simple Individual Checking 1.00% $0
    nbkc bank Personal Account 0.65% $0
    Ally Interest Checking 0.10% - 0.50% $0
    TIAA Bank Yield Pledge Checking 0.40%** $0
    Radius Bank Rewards Checking 0.10% - 0.15%*** $0
    Capital One 360 Checking 0.10% $0
    Chase Premier Plus Checking 0.01% $25****
    Discover Cashback Debit Checking 0% $0

    Note: The APYs (Annual Percentage Yield) shown are as of July 2, 2020. The rates for some products may vary by region.

    *You’ll qualify for this APY if you make 10 or more debit card payments and/or purchases that post to your account each month, have at least one direct deposit or ACH each month and receive eStatements each month.

    ** Intro APY

    *** 0.10 percent APY on balances of $2,500-$99,999.99. 0.15 percent APY on balances of $100,000 and up.

    ****$25 fee can be waived with one of the following each monthly statement period: (1) An average beginning day balance of $15,000 or (2) a linked qualifying Chase first mortgage enrolled in automatic payments from your Chase account

    Checking Account Details Glossary

    • Minimum Balance to Open

    • Monthly Fees

    • Overdraft/Non-Sufficient Funds (NSF) Fees

    • Minimum Balance to Avoid Fees

    • Fees to Use Another Bank's ATM

    Resources