Best free checking accounts in January 2020

10 min read

They say nothing in life is free. But when it comes to banking, you shouldn’t settle for anything less than a free checking account.

The best checking accounts are not only free, but may also offer you perks such as a high annual percentage yield (APY), out-of-network ATM reimbursement or free official bank checks.

Checking fees to be aware of

Many free accounts can end up costing you fees if you don’t fulfill the requirements set by the bank on the account. Make sure you know what these rules are before opening an account.

Some fees to be on the lookout for

  • Maintenance fee: You’ll usually get charged this fee if you go below a certain balance in a monthly statement period.
  • Overdraft fee: Transactions that cause a negative balance can lead to this fee.
  • Sustained overdraft fee: This fee is charged after a certain amount of time if your account remains negative.
  • ATM fees: Know what it will cost you to access your money from an out-of-network ATM. Some banks will reimburse some or all of these fees. According to Bankrate’s 2019 checking account and ATM fee study, using an out-of-network ATM costs an average of $4.72. A customer’s bank charges an average of $1.63 and then ATM surcharges from the ATM cost customers an average of $3.09.
  • Paper statement fees: Receiving paper statements in the mail will cost you at a lot of banks.

Compare: Best free checking accounts in January 2020

Ally Bank: Interest Checking Account

Ally Bank offers a checking account that doesn’t have a monthly maintenance fee or a minimum opening deposit. It also offers a little interest, 0.1 percent APY on balances less than $15,000 and 0.5 percent APY on minimum daily balances with a minimum daily balance of $15,000.

The interest checking account also offers freebies, such as free standard checks and access to free Allpoint ATMs.

  • Minimum deposit and balance requirements: $0
  • Yield: up to 0.5 percent APY ($15,000 minimum daily balance required for this APY.)
  • Rewards and incentives: Free standard checks, cashier’s checks, incoming wire transfers without a fee and free access to Allpoint ATMs.
  • Overdraft options: There’s a $25 fee for an overdraft item paid or returned. You only get a maximum of one fee per day.
  • Fees to be aware of: Cross border/currency conversion fee of up to one percent of the transaction price.

Capital One: 360 Checking Account

This checking account earns a little bit of interest on all balances and doesn’t require money to open or maintain this account. It also gives you fee-free access to more than 39,000 Capital One or Allpoint ATMs.

You can open a 360 checking account either online or at a Capital One location, so you can choose whichever account-opening process you prefer.

  • Minimum deposit and balance requirements: $0
  • Yield: 0.2 percent APY
  • Rewards and incentives: Your first checkbook order is free.
  • Overdraft options: You can auto-decline overdrafts, you can add funds to the account to cover the overdraft with next-day grace, you can apply for an overdraft line of credit or free savings overdraft protection is an option.
  • Fees to be aware of: Additional orders of 50 checks are $5.

Discover Bank: Cashback Debit Account

This checking account gives you both an account with no monthly maintenance fee and a cash-back option. You earn one percent cash back on up to $3,000 in debit card purchases each month with this checking account.

This account will also let you get free standard and official bank checks.

  • Minimum deposit and balance requirements: $0
  • Yield: None
  • Rewards and incentives: One percent cash back on up to $3,000 debit card transactions per month, free standard checks, official bank checks, no stop payment fees and free withdrawals at more than 60,000 in-network ATMs.
  • Overdraft options: Overdraft protection links your checking, money market account or savings account at Discover Bank. It doesn’t cover ATM transactions, debit card transactions or transfers at Discover Bank.
  • Fees to be aware of: Discover Bank doesn’t reimburse out-of-network fees charged by other banks.

nbkc bank: Personal Account

nbkc bank is an online bank that also has four locations in the Kansas City area. The nbkc personal account offers you a competitive APY for a free checking account. It only takes $5 to open this account.

The personal account also reimburses up to $12 worth of ATM fees incurred by using ATMs that aren’t in the nbkc or MoneyPass network.

  • Minimum deposit and balance requirements: $5 to open and no minimum balance.
  • Yield: 1 percent APY
  • Rewards and incentives: Free starter book of checks, more than 32,000 MoneyPass ATMs in the U.S. and Puerto Rico won’t charge you a fee and nbkc bank reimburses up to $12 of out-of-network ATM fees charged by using other ATMs.
  • Overdraft options: No fee for overdrafts or for not having sufficient funds in your account.
  • Fees to be aware of: It costs $5 to send a domestic wire transfer and $45 to send an international wire transfer.

Simple: Simple Individual Checking

Simple accounts have their money held at BBVA USA, Simple’s partner bank. When you sign up for Simple, every customer receives a Simple individual checking account. Once you have that account, you’re eligible to open a protected goals account. That account is where you can earn up to 1.9 percent APY, which is competitive with some high-yield savings accounts.

  • Minimum deposit and balance requirements: $0
  • Yield: 0.01 percent APY. (Once you have a Simple Individual Checking Account. You can apply for the Protected Goals Account to earn up to 1.9 percent APY on balances $10,000 and above and 1.75 percent APY on balances under $10,000.
  • Rewards and incentives: Competitive APY with the Protected Goals Account, no stop payment fees and no charge for incoming wire transfers.
  • Overdraft options: No fee charged for both overdrafts and for having insufficient funds.
  • Fees to be aware of: Visa charges a one percent international service fee on international transactions. This includes non-U.S. ATM withdrawals and purchases. Simple doesn’t reimburse out-of-network ATM fees and it charges $5 for a personalized order of 25 checks.

TAB Bank: TAB Bank Kasasa Cash Rewards Checking Account

TAB Bank is a commercial bank that was founded in 1998. It is located in Ogden, Utah. It offers a very high APY on its Kasasa Cash Rewards account. But unlike a typical high-yield savings account, you’re going to need to meet certain requirements to get this high APY.

This includes having at least one direct deposit, ACH transaction or bill pay transaction and you need to make at least 15 debit card transactions of at least $5.

  • Minimum deposit and balance requirements: $0
  • Yield: Up to 4 percent APY on balances up to $50,000.
  • Rewards and incentives: Up to $15 reimbursed monthly on ATM withdrawal fees if you meet the rewards requirements. These include at least one qualifying direct deposit, at least a combined total of 15 debit card transactions that are each at least $5.
  • Overdraft options: No fee for overdrafts.
  • Fees to be aware of: If you don’t meet the reward requirements you won’t be reimbursed for fees incurred using other ATMs.

[COMPARE: Best checking accounts]

Is there a catch to a free checking account?

Usually there’s a way to make your bank account free. A lot of banks charge maintenance fees, but these fees can often be waived if you meet certain criteria, such as maintaining a minimum balance above a set level or having a direct deposit of a certain amount.

An account that requires a high minimum balance means you’re keeping money in an account just to avoid a maintenance fee. The larger the amount of money, the more of a problem this is.

For instance, if you have debt this money would be better used toward that. Or if the account isn’t earning a competitive APY, a high-yielding account may be a better option — so that your money keeps growing.

Getting a competitive yield

There are free checking accounts that will offer you a competitive APY without costing you in fees. But you’ll likely have to have a direct deposit or make a certain number of debit card purchases to qualify for this high APY. At some banks, you might have to meet both of these requirements.

Unlike most savings accounts and money market accounts at online banks, this high APY might be capped if your balance goes beyond a certain amount. Once it surpasses a certain threshold, that additional money can earn less than the top-yielding savings accounts and money market accounts.

Minimum deposit and balance requirements

Accounts usually have a minimum amount required for opening and a minimum balance that you need to stay above in order to avoid a maintenance fee.

Approximately 42 percent of checking accounts that don’t earn interest are considered free, according to Bankrate’s 2019 checking account and ATM fee study. A checking account is considered free if it doesn’t charge monthly maintenance fees or require a minimum balance.

Some banks may have a checking account that will waive this fee if you have your direct deposit going into this account.

The average minimum balance needed to open a non-interest checking account is $162.94, according to that same Bankrate study.

If you want an interest-bearing checking account, that may require an even higher minimum balance. The average minimum balance requirement on those accounts is $7,123 according Bankrate’s 2019 study.

Look for an account that either doesn’t have a maintenance fee or one with a minimum balance requirement that you can always stay above.

Rewards and incentives

Some free checking accounts will give you a higher APY if you have a direct deposit or make a certain number of purchases with a debit card. These checking accounts should be considered if you can meet the requirements.

Banks also may offer reimbursement on out-of-network ATM fees, free official checks or a free order of standard checks on an account that is free as long as you meet its direct deposit or balance conditions.

If you’ve had your checking account for years, that’s normal. The average U.S. adult has had the same primary checking account for around 16 years, according to a survey conducted for Bankrate and Money in 2017.

But banking has changed a lot in the past 16 years. For instance, some checking accounts offer cash bonuses for opening a new account. It’s always good to compare checking accounts to see if there’s a better one for you. This is especially true if your checking account is charging you fees.

Overdraft options

See if your bank has an option to enroll in debit card overdraft protection. If you’re going to enroll in this, ask how much the fee will be if a transaction is paid that takes your account negative.

Bankrate’s 2019 checking account and ATM fee study found the average overdraft fee is $33.36.

Here are the overdraft options at Capital One, for example:

  • Auto-decline: Transactions that take your account balance negative will generally be declined by the bank.
  • Savings overdraft protection: A linked savings account or money market account can fund a transaction that would otherwise take your checking balance negative. So you’ll need to have at least two bank accounts, a savings deposit account and a checking account, in order for the checking to pull from savings to cover an overdraft. This type of overdraft may be less costly than standard overdraft charges.
  • Overdraft line of credit: A line of credit that backs up your checking account. This will generally have an annual percentage rate (APR) that will charge interest on balances.
  • Opportunity to make your account positive: You may have some time, at Capital One its a full business day, to fund your account with the amount you’re overdrawn to avoid an overdraft fee.

Pros and cons of free checking

Before opening a free checking account, weigh the pros and cons to see if it’s the right product for you.

The pros of opening a free checking account include:

  • There are many options that have low minimum balance requirements. Some might not even have any minimum balance required to open and maintain the account.
  • With some accounts, you may be able to use any ATM convenient to you for free.
  • Paying fees on a checking account should be avoidable. Instead of paying these fees to a bank, this money can be used to pay bills or fund an emergency fund.
  • Some free checking accounts may offer you more perks and benefits, such as free checks, cash back on debit card purchases or a high APY.

The cons of opening a free checking account include:

  • If you need to make a certain number of debit card purchases in order to meet the account requirements to get a higher APY, you might be better off with a cash back or rewards credit card. Compare these options to see which is better for you.
  • Many checking accounts are free, as long as you maintain a certain balance. But some accounts might have very high minimum balances. Having a lot of money in a checking account that isn’t earning a high APY, just to avoid a maintenance fee and for some perks, might not be worth as much as having your money in a high-yield account.

Potential fees to try and avoid

If you’re getting charged fees, you need to reevaluate your accounts to avoid paying these. Here are a few of the most common ones to steer clear of.

Maintenance fees

A bank generally charges this fee if you go below a certain balance in your account. Some banks may waive this if you have a direct deposit into your account, though it might have to exceed a certain dollar amount.

How to avoid this fee: Find a bank that doesn’t charge a maintenance fee or one that has a low minimum balance. Also, find a bank that will let your direct deposit waive the monthly maintenance fee.

Overdraft fees

Keep an eye on your account using an app, online banking or a checkbook register.

How to avoid this fee: Sometimes having too many bank accounts can result in an overdraft happening. Consolidating accounts could prevent this from happening. Planning and budgeting can also help you prepare for expenses.

ATM fees

Using an out-of-network ATM is another common fee.

How to avoid this fee: Find banks that either waive a certain amount of out-of-network ATM fees or banks that have a large network or a network convenient to you. Also, you’re usually able to get cash back on a debit card purchase at a grocery store, pharmacy or convenience store. There are usually limits, just like on ATM withdrawals, to how much cash back you can receive.

What to expect when opening a checking account

Generally, it should take under half an hour to open an account. There are some circumstances where it might take longer.

The account opening process may take longer if you have a credit freeze on your credit file and the bank’s policy is to contact at least one credit bureau during the account-opening process. If you have a freeze on your credit in place, check with the bank before applying to see whether you need to lift the credit freeze at only one credit bureau or whether you need to do this at multiple bureaus.

What do I need to provide when opening a new checking account?

This will vary from bank to bank. Here is a list of items you might need to provide or be aware of when opening a new checking account:

  • Your legal name
  • Social Security number or tax identification number
  • Date of birth
  • Occupation
  • Email address
  • Phone number
  • Mother’s maiden name
  • Address
  • Scan of your government-issued photo ID
  • You may have to lift a credit freeze, or security freeze, from your credit file before opening a bank account.
  • Initial deposit (If you’re making it electronically from an existing account, you may need the routing number and account number for this account.)

Can I open an account online?

At an online bank, you’re almost always able to open an account online. Many brick-and-mortar banks also let you open up accounts online.

An online bank may also allow you to apply for an account over the phone.

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