Checking Accounts Summary & What You Need to Know
Best Checking Accounts
|Radius Bank||Radius Hybrid||Free Checking|
|Bank5 Connect||High-Interest Checking||Free Checking|
|Alliant Credit Union||High-Rate Checking||Free Checking|
|Aspiration||Summit Account||Highest Rate|
|Radius||Radius Hybrid||Highest Rate|
|Bank5 Connect||High-Interest Checking||Highest Rate|
|Ally Bank||Interest Checking||Low Fee|
|Radius||Radius Hybrid||Low Fee|
|Bank5 Connect||High-Interest Checking||Low Fee|
|Fidelity Investments||Cash Management Account||Most Convenient|
|Capital One 360||360 Checking||Most Convenient|
|Chase||Chase Total Checking||Most Convenient|
Checking accounts are the most common type of bank accounts. They let you make withdrawals and deposits out of ATMs, write checks to other people, transfer money with online banking, or make purchases at stores with a debit card. Banks also let you make many transactions per month with a checking account. Other bank accounts, like saving accounts, usually have a strict limit on the number of times you can take money out of your account each month.
Checking accounts also have low fees, and some are free to set up. In exchange, many of these accounts don't let you earn interest. Checking accounts aren’t great for building savings but rather are a convenient place to keep your money.
Why Do You Need A Checking Account?
A checking account is one of the safest places to keep your money. Your deposits are insured by the government so you can’t lose the money you put in your checking account.
Checking accounts also make it easier to manage your finances. You can pay bills with checks or online banking, have your employer automatically deposit your paycheck into your account, and take out money around the world with your debit card. When you manage everything with cash, there’s always the chance you could misplace money, and some companies don’t accept cash payments. With a checking account, you’ll have a more convenient way to handle your finances.
Types of Checking Accounts
Basic checking accounts are designed for core financial activities. With these accounts, you usually get access to a debit card and online banking. They usually won’t pay interest on your savings, and if you want anything else like write checks or use a safety deposit box, you’ll need to buy them separately. You're likely to face a low monthly account fee with simple fee-waiver requirest --some checking accounts will not charge any monthly fees at all.
Premier checking accounts come with more perks. They can offer free checks, access to a safety deposit box, waived fees when you use out-of-network ATMs and higher interest rates than basic checking accounts. In exchange, the monthly service fees and minimum balance requirement to waive those fees are likely to be much higher.
High-interest checking accounts allow your balance to earn interest. Usually, the rates are significantly lower when compared to a savings account. However, you can find some great interest rates with online banks. Another option is to open a brokerage checking account with your stock broker. Some brokerage firms let their clients open checking accounts that earn more interest, though there might be more restrictions on how often you can take out your money.
Second chance checking
If you've mismanaged a checking account in the past, banks could refuse to give you a regular checking account. A second chance checking account can help you repair your reputation with banks. These accounts tend to carry a monthly fee and could have a higher minimum balance requirement. However, after using one of these accounts responsibly for a few months, you’ll likely be able to upgrade to a regular checking account.
Student checking accounts
Student checking accounts are basic accounts targeted to students in high school or college. They usually waive the minimum balance requirements and service fees until the student graduates or reaches a certain age.
How To Pick A Checking Account
Your banking needs
How much money do you plan on keeping in your checking account? For most people, this is the biggest factor when they compare checking accounts. A premier account with free checks and other features are nice, but unless you really need to keep thousands of dollars in your checking account, it makes more sense to use a basic account and buy these extras separately.
Your checking account lifestyle
How often do you plan on making withdrawals? If you like to make multiple small withdrawals every week, make sure your checking account doesn’t have a low limit for transactions.
Also, do you think you’ll want to use out-of-network ATMs to take money out? In this case, you should choose a checking account that reimburses you for these fees, so you don’t get stuck paying $5 or more every time you take money out. If your financial activity is likely to lead to many fees, consider checking accounts with friendly fee policies.
Online vs. traditional banks
Traditional bank accounts can be more convenient especially if you like being able to talk to a bank teller in person. You usually have access to more branches ATMs and can get money out of a traditional checking account more quickly.
Online bank accounts usually pay a higher interest rate on your savings and have lower account minimums and fees. It can take a little more planning to move money in and out of your online account, but this approach can be more cost-effective. Another solution is to open a checking account at your bank for daily transactions while having most of your money in an online account. It is important that your checking account provides a high level of convenience for that way that you bank.
What Fees To Expect
Monthly maintenance fee
A monthly maintenance fee is common for checking accounts, especially those from banks that operate physical branch and ATM networks. Most of the time, you can avoid this fee if you meet one of these criteria:
- Maintain a minimum balance requirement
- Receive direct deposits each month (e.g., paycheck, government benefits, etc.)
- Use your account in a certain way (e.g., perform 10 debit card transactions)
Not all banks charge this fee so you can also shop around to find avoid these bank fees.
If you take out more money than you have in your checking account, either through a withdrawal, check, or debit purchase, the bank will charge an overdraft fee. This can be as much as $30 or more per transaction. To avoid overdraft fees, you can ask your bank to deny transactions that push you over your account balance.
Banks let you take money out of their ATM network at no charge but if you use another company’s ATM, you’ll need to pay a fee of a few dollars. The other company might charge you an ATM fee as well. So you could find yourself paying $5 or more just to make one withdrawal. To avoid ATM fees, use a bank that has many machines in your area and
To avoid ATM fees, use a bank that has many machines in your area. Plan ahead to only use in-network ATMs. Another option is to find a bank that charges no ATM fees, even if you use out-of-network machines. Some checking accounts will refund you for the surcharges imposed by these ATMs too.
Other checking account fees
If you want the bank to mail paper account statements to you each month, they might charge a paper statement fee. If you bounce a check, meaning you give someone a check and don’t have enough money, you could pay a returned check fee. If your checking account limits monthly withdrawals, you would pay a fee for every withdrawal made over the monthly limit.
Services You Should Consider
Online banking is virtually found with every bank in the U.S. With online banking, you can usually review your account details, view balances and transactions, pay online bills, perform fund transfers, and much more. Every bank's online account services will vary. If there is a particular online banking feature that you prefer, make sure that you're going with a bank that provides it.
Mobile banking lets you manage your accounts directly through a mobile device, such as a smartphone or tablet device. Many banks offer their own mobile applications on these devices. Mobile banking features will be very similar to the bank's online banking features. However, you could gain access to additional features such as mobile check deposit, which allow you to deposit a check without going to a bank branch or ATM.
Check printing/free checks
While online banking gives you more options to pay bills and transfer money, it’s still nice to have some regular checks. Some companies and government agencies won’t accept online transfers and only accept paper checks. Make sure your bank at least gives you the option to buy checks for your account. If they offer free checks, that’s a nice bonus but it’s inexpensive enough to buy checks yourself.
Bank customer service
Make sure the checking account you choose offers a comfortable level of customer service. If you prefer dealing with everything in-person, you most likely need to work with a traditional bank that has branches in your area. If you want phone service, make sure your bank has convenient hours to call for help; many offer at least some kind of 24-hour service. Online customer service is also becoming popular. This is a way to chat with a representative online as you go over your online banking account.
If you know of a checking account that deserves to be a winner, we encourage you to share it in the comments below. You could end up helping others who are also looking for a better checking account.
For a simple, guided approach to choosing a new checking account, our personalized quiz will find the best checking account for your specific needs.