Telebank ranks highest in survey of 20 best and 20 worst checking accounts

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A cyberbank has snatched top honors in’s semiannual checking survey.

And the winner is the “branchless” Telebank (now e*tradebank) from the Washington, D.C., market.

But if your bank still bogs you down with fees, makes you keep a $10,000 balance that earns no interest and the account still costs several hundred dollars a year to maintain — it’s time to shop both bricks and clicks. , in its semiannual checking account price study, has rounded up the 20 best and 20 worst deals to make the trek through the banking mega-mall a little easier.

The best deals share a characteristic that will help narrow the search: You won’t find one at any of the 50 largest banks in the country.

The 20 worst are a lot alike, too: Fourteen are at three of the four biggest banks.

Go local for best deals

The survey found that community banks and savings and loans still beat the pants off the national megabanks when it comes to offering good deals.

The key to getting the best deal: Shop around. For example, free checking accounts are available in all of the country’s 35 major cities.

Before making a decision, though, consumers need to ask themselves whether the savings will offset the hassles of switching.

“To undo the kind of stuff you have to do to get a low-cost checking account is a lot,” warns Jeanne M. Hogarth of the Federal Reserve’s Consumer and Community Affairs division.

“If you have established an electronic relationship — with direct deposit, online bill paying — and you decide to pick up and move, you have your mortgage, car payment, utilities and a whole bunch of things to change,” she says.

If you weigh everything and your bank still comes up lacking, there is good news. “You do have to shop and compare, but there are lower cost alternatives out there,” says Hogarth.

Virtual is its own reward

The best checking deal on’s list is a virtual reality.

Telebank gets the crown and roses for its attractive yield — 3.15 percent — which nets $32.35 a year if you maintain a $1,000 balance. Actually, they do have one branch (that was one of the criteria for the survey)

Virginia-based Telebank, which early this year became the first nationwide cyber institution to join the ranks of the top 50 federally chartered savings banks, charges only $5 a month if you can’t keep the minimum balance, and lets you open an account for $100 and no fee for six months if you set it up via the Internet.

The mud pie goes to Citibank FSB in San Francisco and Miami.

Their Regular Checking accounts in those cities are tied for the worst of the Worst Deals, requiring a whopping $10,000 balance that is not earning interest to avoid a $25 monthly fee. Bounced checks cost $30 apiece. Total cost to the consumer each year is $330.

“Citibank has the distinction of the four worst accounts,”’s study says.

The bank’s other checking accounts that round out the top four duds are the interest checking account in the same two cities, which yield only 0.50 percent in Miami and 0.75 percent in San Francisco. These accounts fall below even what found to be a puny national average of 0.84 percent.

Citibank also has two other accounts on the Worst Deals list — its Basic Checking in Miami and San Francisco — for six of the 20 most expensive checking accounts,’s survey found.

“We tailor our accounts to various transactional needs,” says Citibank spokesman Mark Rodgers.

The good guys

“Community banks and savings and loans continue to have the price edge over their bigger, national rivals,” the survey found.

The No. 2 and 3 best deals are in Seattle at United Savings & Loan which has made the list previously.

United’s Personal Checking and Super Checking accounts feature 2.79 percent yields that earn $24.85 a year if you maintain minimum balances of $500 and $1,500, respectively. Monthly services fees are below average, at $5.

Washington Federal Savings & Loan’s interest-earning Performance Checking accounts in Seattle, Phoenix and Portland are also among the best buys. And Washington Federal has been on the Best Deals list before.

“Virtually all the best buys had a few things in common,”’s survey concludes. “Low minimums to open and avoid fees, high yields and lower-than-average overall fees.”

The 20 Worst Deals are a lot alike, too:

  • 16 are interest-bearing;
  • 15 require a $10,000 balance to avoid fees;
  • 17 charge a monthly service fee of $20 or more;
  • They cost $251 to $330 a year to maintain.

Assisting Citibank in providing the most Worst Deals are Bank of America and First Union.

Bank of America blankets California with four rotten offerings — the Prima Checking account in Los Angeles, San Francisco, San Diego and Sacramento.

Its Advantage Checking in Miami, another city hit hard by bad deals — five altogether — ranks as the 20th worst deal.

First Union has three bombs with its Performance Checking accounts in Philadelphia, Norfolk, Va., and Charlotte, N.C.

Chasing good deals

There is one big player whose name is conspicuously missing from the Worst Deals list. Chase Manhattan, the second-largest bank, is not running with the pack.

“Chase continues to employ a more modest monthly service fee and lower minimum balance requirement to avoid fees than those on the worst deals,”’s survey says.

California, where seven of the 20 worst deals are located, does have a couple of counter-punches, thanks to Luther Burbank Savings in San Francisco.

Luther is a newcomer to the Best Deals, with its Regular Interest Checking and Unlimited Money Market Checking.

Luther also has the distinction of charging the lowest rubber-check fee on the list, at $10.

A few good men

Other institutions making their first appearance in the Best Deals list are:

  • Alden State Bank in Buffalo, N.Y., with its Money Fund account;
  • FirstBank of Colorado in Denver, which has an attractive offering in its Money Market Checking;
  • Collinsville Building and Loan Association, in St. Louis, which has two accounts in the top 20 — First Class and NOW checking.

A few more banks hanging in there to provide Best Deals for at least the second time are:

  • Bay Financial Savings in Tampa, which had the best account in last year’s survey
  • Arundel Federal Savings in Baltimore
  • United Midwest in Columbus, Ohio
  • Flagstar Bank in Detroit
  • Matrix Capital in Phoenix
  • Essex Savings in Norfolk, Va.
  • First Federal in Kansas City, Kansas
  • Wauwatosa Savings in Milwaukee

Consumers who think they have to stick with a bank because they have been there a long time can find themselves in a rut, says Jane Schuchardt of the American Council on Consumer Interests.

“Banks are big on brand loyalty,” she says. “Consumers need to get past that. It’s critical to shop around and compare not only cost, but the services you’re getting, too.”

Note: surveyed 1,183 accounts at 353 financial institutions in the 35 largest markets. The rankings are based on a $1,500 monthly balance held in a checking account for one year, with an average of 12 transactions a month and one bounced check per year. Simple interest is credited if it is an interest-earning account.