Most banks and credit unions offer at least one or two checking account options that can be free, although you may have to jump through a few hoops to avoid monthly fees. Common requirements to get free checking include setting up a certain amount in direct deposits each month, or maintaining a minimum balance across all accounts with the institution. Of course, these requirements vary from bank to bank, along with other details like the minimum amount you need to open an account.
But, it’s possible that free checking accounts could become a thing of the past — or at least come in much shorter supply than they are right now.
This prediction is based on the fintech crisis that left millions of Americans unable to access their funds this summer. Beyond that, pending government legislation that would cap overdraft and late fees for consumers could also result in the loss of free checking per specific warnings from JPMorgan Chase.
These warnings from Chase, which were reported by the Wall Street Journal, said the passage of this legislation could result in more fees on currently free accounts and other banking services. And if a large consumer bank like Chase tacks on more fees to their accounts to make up for lost revenue from other sources, its likely more banks would follow suit.
Why Free Checking Matters
The fact banks might miss out on some overdraft and late fees seems like a poor excuse for free checking accounts to go by the wayside. And since banks directly benefit from being able to hold your money, you shouldn’t have to pay for the privilege.
The requirements that make certain checking accounts free can also be difficult for some consumers to meet. For example, Chase Total Checking® comes with a $12 monthly service fee unless consumers have it waived with electronic deposits of $500 or more each statement period, a beginning balance of $1,500 or more in the account each day, or an average daily balance of $5,000 or more across all eligible Chase accounts. Not everyone uses direct deposit or has the extra funds to maintain that big of a balance in their checking account, at least not every month.
According to Kevin Cohee, CEO of OneUnited Bank, free checking accounts are vital for the financial well-being of many communities since they provide a gateway to essential banking services for everyone, regardless of income level.
“Free checking helps individuals who may not qualify for other accounts due to minimum balance requirements,” he says.
Eliminating monthly fees can ease financial burdens and empower individuals to manage their money more effectively as well. And since many consumers pay all their bills online without the need for paper checks, most banks could easily offer free checking accounts with minimal features and online bill pay without taking on an undue financial burden themselves.
Where To Find Free Checking
Fortunately, there are still a ton of banks and credit unions that offer free checking accounts. Many also come without the hassles some of the larger national chains place on their accounts, including monthly minimum balance or direct deposit requirements.
But make sure you understand if your free checking is offered directly from a bank, or if you’re using an app-based Fintech. This is where problems can arise. As recent as June 2024, the FDIC warned against depositing money into non-banks that promise federal insurance through third party companies.
Essentially, funds you send to a nonbank that offers FDIC insurance through a partner are not actually insured until the funds you send are deposited with the third party institution. Even then, the nonbank company “must take certain actions for your funds to be eligible for FDIC insurance,” writes the FDIC. This includes the maintenance of records that identify who owns the money and how much.
Further, FDIC deposit insurance “does not protect against the insolvency or bankruptcy of a nonbank company,” writes the agency. “As a result, you may want to be particularly careful about where you place your funds, especially money that you rely on to meet your regular day-to-day living expenses.”
What To Look For In A Free Checking Account
If you have your paycheck directly deposited into your checking account each month, you always have a few thousand dollars in your account, or both, this opens the door to more “free checking” options from larger national banks and credit unions.
In any case, you should look for the following benefits with any checking account you’re considering:
- Insurance through the FDIC (for banks) or the NCUA (for credit union accounts)
- Large network of fee-free ATMs
- Debit card access
- Online banking access with bill pay
- Highly-rated mobile app
- Overdraft protection options
- Interest on deposits
Also, decide whether you want the option to do some of your banking in person, or if you’d be perfectly fine taking care of your bill payments and other banking tasks online or with the help of a mobile app.
These services should be free and still are if you choose your bank carefully and go with one that has account maintenance fees you can easily avoid.
The Bottom Line
If free checking accounts become harder to find down the line, all the current rules for finding them may just go out the window. Until then, you can still find free checking accounts from an abundance of online and traditional banks and credit unions, although some require a minimum balance or regular direct deposits to have monthly fees waived.
Whatever type of account you choose to go with, there are other factors to consider outside of monthly maintenance fees as well. At the very least, make sure you choose a bank or credit union that has standard FDIC or NCUA insurance on deposits. Also opt for a bank that offers free bill pay and has a broad network of fee-free ATMs in your area.
Read the full article here
