All About Free Online Checking Accounts – Why Pay More Fees Than You Have To


Don’t you hate it when you look at your checking account and see less money there because of fees you were charged?

And isn’t it annoying when you look at the requirements of checking accounts of many traditional/brick and mortar banks?  (Are you checking the requirements?  Gotta ask.)

They say they have free checking but you have to fulfill a maze of requirements: have a direct deposit with them, have an account balance of at least X for the month, stay under Y transactions… It’s hard to keep up!

blank_checkSo what options are out there?  Free online checking accounts!

As technology and the internet have grown, companies have stepped up and recreated the wheel, so to speak.  A number of banks have introduced free online checking accounts that are easy to use and full of features.

And because these companies are online and don’t have to manage physical bank locations, they can offer their customers more benefits such as higher interest rates, cash back rewards, and free services like bill pay – all nice bonuses in addition to a free online checking account.

Are you not with me yet?  Fine.  Understand that there are many checking accounts out there that are chock full of serpentine fees just waiting to suck your hard-earned money out.

These Are some Common Checking Account Fees You Want to Avoid

Minimum Balance Fees

Many accounts out there require to keep a minimum amount of money in your account otherwise they hit you with a fee for your account.  I’m fine with there being a minimum in order to get some kind of bonus, like bill/pay or better interest, but I don’t want to have to worry about what my minimum amount is to avoid fees.

Monthly Fees

Some banks simply charge you a monthly fee for your account, it’s not even a matter of keeping a minimum dollar amount.  Who wants that?!?  Monthly fees slowly eat away at your money.  Take a look at the fee structure of any checking account you are considering and make sure you understand if there are any set fees or if there is anything you need to do to avoid the fees.

Transaction Fees

Just using your account in some cases, sets you up for fees.  For example depositing a certain number of checks.  You get a checking account to use it.  You don’t want to be penalized for your transactions.

ATMATM Fees

This one is a toughie.  Most banks will charge you an ATM fee if you use an ATM outside of their network, even online ones.  But you don’t have to be taken to the cleaners every time you need money.  Some banks just don’t have enough branches for you and you get stuck paying ridiculous fees to get your money.  Make sure the bank you use has ample ATMs and won’t hit you with excessive fees.

We’ll see some of the better ATM offerings from online checking accounts below.

Take a look at our article on checking fees for more information on what to avoid.

Now that you know what to avoid I want you to see why an online checking account is good for you.

Benefits of Online Checking Accounts

Interest on Deposits

Have you seen the interest rates on most brink-and-mortar checking accounts?  It’s laughable.  They really might as well not offer it at all.  Add that to the fees many charge and it’s almost insulting.

Online checking accounts, like Capital One’s 360 Checking and Everbank, offer up better rates for you.  You won’t get rich off the interest but you do have the opportunity to earn some money.  The rates these banks offer tend to be exponentially higher that what the national average is for checking (it may still be low but I like the idea of being able to earn something usable).

More Reasonable Fees

Remember all the fees I said to look out for above?  Online checking accounts tend to have more reasonable fees and in many cases eliminate fees that other banks charge.

These are some of the fees you can expect to be better, or eliminated with online checking:

ATM Fees – Many online banks are part of large ATM networks that allow you to take money out of a variety of places (this makes sense since there may not be a physical branch that exists).  These networks can end up bigger than what your standard brick-and-mortar branch offers.  Still other online accounts just not charge you when you use other ATMs (there may be a limit but it’s still a cool perk).

Minimum Balance Fees – Remember we told you to avoid these?  Well most online checking accounts, or at least the ones we like, don’t have minimum balance requirements.

Fewer and Lower Fees Overall – Online checking accounts tend to just have fewer fees and the ones they have tend to be lower.

Easy Transfers, Bill Pay, and Deposits

Since these are online banks you’ll be doing most of your banking…  you guessed it, online (there are some online checking accounts that have physical branches available).  They tend to make transferring your money to other accounts easy as well as offer up bill pay options so you can make sure you get your bills paid on time.  These days you can do a lot of your banking on a smartphone even.  Gone are the days where you have to go to the bank to deposit a check.

It Doesn’t Make Sense Having To Pay More Fees Than You Have To

Old-style checking accounts are dinosaurs in today’s world.  You don’t get that toaster for opening up your account anymore.  Instead you get hit with a slew of fees that eat away at your money.  You hear stories all the times about Traditional Bank X introducing some new fee to their customers.  Online banking has come along way and it makes sense to use an online bank due to their ease of use and lower fees.

Now that I’ve told you how awesome an online checking account can be let’s take a look at some of the better ones…

Here are some of the best, innovative, and popular free online checking accounts around (including one that I use):

best free online checking accounts

Capital One 360 Checking

Click here to start saving with Capital One 360This is a free online checking account that I have and use.  I’ve had an account for years now (from way back when they were ING Direct) and have savings, checking, and investing (via ShareBuilder) through them.  Their customer service is awesome.

The 360 Checking account will earn you interest on the deposits you have.  While not as high as Everbank, the rates are still higher than many savings accounts and most checking accounts.  Their rates are tiered by three levels ($0-49,999.00; $50,000-$99,999.99; and $100,000 up).

360 Checking also offers a free debit card with access to over 35,000 ATMs.  True story – After we signed up for 360 Checking (formally Electric Orange) we discovered that there were more ATM’s available to us than what our National, brick and mortar bank offered!

Free online bill pay is available to all customers and they will mail out paper checks for you, if needed (saves you on postage).  They also have a neat feature that allows you to make Person2Person payments to anyone other bank account.  If you owe your friend a few bucks you can send it to his checking account.  If he’s a Capital One 360 customer the transaction will be instant.

Capital One 360 Checking has also recently started to offer checkbooks for their customers so you can send out physical checks yourself.  Some people feel more secure doing the check writing themselves.  The cost for the checks is quite reasonable and much less than what most brick and mortar banks charge.

They also offer check scanning through their smartphone app so you don’t have to leave your house or mail anything in order to deposit your checks.

What I like about 360 Checking is that it fits nicely with my 360 Savings account.  If I need cash from my savings account I can transfer it to my checking and get it from an ATM.  Or if I know I’m going out shopping I can transfer enough to my checking to cover it and use my debit card rather than put more expenses on a credit card.  Their site is also easy to use and understand.  Even better is when I can transfer on the go through their phone app!

I think 360 Checking makes a great checking account for those that have 360 Savings or anyone else looking for a good all-around free online checking account.

Note:  Capital One 360 Checking is the former Electric Orange from ING Direct (Capital One bought ING Direct’s U.S. business).  I loved my ING Direct accounts and from what I have seen so far Capital One has kept all the great features and customer service that made ING Direct great.

Visit 360 Checking for more information and to sign up.

USAA Checking

Get More with a Free USAA Secure Checking AccountUSAA checking comes from the United Services Auto Association.  They generally provide financial and insurance products to military members and their families but they have a number of products, like checking, that are available to the general public.

Their free checking account has over 60,000 USAA-preferred ATMs that you can use free.  They will reimburse you $15 in ATM fees charged by other banks and not charge you for the first 10 ATM withdrawals.

You also won’t have a monthly maintenance fee to worry about.

If you have a UPS center nearby you can Easy Deposit your checks there.  There’s also unlimited Web BillPay so you can take care of your bills without needing stamps.  And their phone apps makes managing your money even easier when you’re on the go.  You can also get text alerts when there is any suspicious activity on your account.

I have to say, any time I’ve heard of someone who uses USAA products they absolutely glow about their customer service.

Visit USAA Checking for more information and to sign up.

EverBank

EverBank Free Online CheckingEverbank has a Yield Pledge promise – the rate you earn on their checking account will always be in the top 5% of competitive rates on the market.  So while most checking accounts offer no interest, with Everbank you will get one of the best rates out there.  In fact, your rate will be even better for the first three months you have the account (with a rate higher than many savings and MMA accounts).

But this account isn’t for those with just a few bucks to put away.  The minimum to open an account is $1,500.  Their rates are tiered based on how much you have in the account (so the more you have on deposit the better your rate after the 1st three months).

For months where your balance is above $5,000 you are eligible for free online bill pay and free ATM reimbursements for ATM fees you pay (this can be very helpful if you find yourself using all kinds of ATMs or you don’t want to worry about finding the correct branch).

Another interesting aspect of Everbank is the availability of online check deposits.  With a high-speed connection and a scanner you can deposit checks from the comfort of your home!  They also offer mobile banking.

If you are looking to earn a higher interest rate on your deposits and you have the money to deposit, then Everbank can be a great option for you.

And check this out – Everbank is so confident that you will like your account that they offer a $50 satisfaction guarantee!  Try out their Yield Pledge Checking account for three months and if you aren’t completely satisfied they will send you a check for $50.  To qualify (should you feel you really want to close your account), you must use their online bill pay feature at least three times and you must notify Everbank that you will be closing your account and why within 30 days of your 3-month account opening.

See our Everbank Online Yield Pledge Checking review.

Visit EverBank for more information and to sign up.

Ally Interest Checking Account

Ally Free Online CheckingAlly has zero monthly fees, zero to open, and zero minimum balance.  They offer free online bill pay and free unlimited check writing (yes, there are banks that will charge you to write checks on your account).  Ally also offers free unlimited checks you can order from them.  You also get a debit card to use and ATM fees will be reimbursed for any ATM’s that charge you (yes, free ATM’s).

Ally offers interest on the deposits you have with with rates that vary depending on the amount on deposit.

One feature that’s really nice with Ally is their eCheck DepositSM.  Rather than heading out to deposit a check, you can now scan a check and send the image online for deposit.  Just scan the check, upload it, and submit and you’re done.  I love getting check but it can be a pain to run out, usually with the kids, to deposit it.  The eCheck Deposit option means depositing check from home.

Ally looks like a good, free online checking account with nice perks like free checks and free ATM’s.

See our Ally Bank online checking review.

Finally

To be fair, brick-and-mortar banks are finally wising up and are starting to catch up to online banks.  Many offer up their own online options and with smartphones getting smarter you can do most of your banking without leaving your home.  Credit unions also offer up good options for consumers as well and are worth looking into (we include USAA above).

Still, the “old” school of checking still has lots of fees buried in their terms that you need to watch out for.  Online banks have the advantage of making their checking fees fairer for consumers.

All of the above checking accounts are FDIC insured.

I know you’re smart but I have to tell you to make sure you understand the terms for any account you are looking into opening.

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Published or updated May 1, 2014.

Comments

  1. These are all good choices! The message is take another look at your expenses and this is one way to increase interest on your accounts with no minimum balance.

  2. Great roundup. I’m actually planning to switch to PerkStreet by the end of the week. I’ve been using ING for a few years, but the lack of cash back is enough to switch. I’ll probably keep my ING checking open, though, just in case they decide to bring it out.

  3. I use the Charles Schwab online checking account. I can make check deposit by mail with prepaid envelopes, I can write paper checks, and I get other banks ATM fees refunded automatically. Interest rate isn’t spectacular (.5%), but it is worth it for all of the other perks.

    I have all of my accounts at Schwab so it made sense to have my checking there too.

    • Consolidation is one reason we use ING’s Electric Orange. I can see an account at an investment broker being very useful. Wait, I have that too with ING and ShareBuilder.

  4. I’m really glad you included PerkStreet in this. It’s not just free, it actually makes you money. I just switched my checking (only) from ING to PerkStreet. Let’s face it, we all spend a lot more than we save. Doesn’t it make sense to focus on getting a percentage of what you spend? Now I get 1% back on ever expense that accepts a credit card and I get high yield interest on my savings at ING. I got $3 interest at ING in 2010. I’ll get at least $300 back on my spending at PerkStreet next year!

    • Sounds great! Glad to hear you are having a positive PerkStreet experience.
      Each person needs to evaluate what they want from a checking account and see what works best for them to maximize their account.

  5. The Prudent Planner says:

    I remember when I first found ING Direct a while back. Rates were around 4-5% when my rate at Bank of America was around 1%. Online savings and checking accounts triple the national average so shop around.

    • I LOVED seeing my interest payments every month. Of course now I’ll be happy with free checking (and maybe some bonuses too).

  6. I love my ING. The rates on the checking have all but disappeared from back in the day, but I can’t beat instant transfers from my 12 savings accounts, free online check writing, now the long awaited paper checkbooks, a great website and great customer service. Once they get remote deposit setup things will be close to perfect. I use a Chase Freedom card, so cash back on my debit card would just be a perk, not a must have.

    • Glen Craig says:

      I’m looking forward to remote deposits. And agree about the instant transfers too. One benefit I’ve really come to love is that ING Direct tends to have more ATM locations than my brick and mortar does.

  7. Thanks for the helpful info. For all of these online checking accounts, how do you deposit checks (non-direct deposit)? Can you use the ATMs to deposit checks or is there some other convenient way to do so? Few of the websites seem to be clear on this…

    • Glen Craig says:

      It depends on the bank. In some cases you can mail in your checks while others can use ATM’s. Some allow you to scan checks and PDF the scan to the bank as a deposit (I love this option and hope more adopt it soon).

  8. Great list of accounts here. I am on the fence with my current bank because of all of the nonsense fees. Can’t wait to switch to an online bank!

  9. How about credit unions? I have belonged to a credit union since I got out of school, but checking (and ATMs) are not only free, I actually get some (small) return. The only fees I ever see are when I but physical checks. I only need $5 in my account! With free $200 overdraft protection, it’s an easy decision. Be sure to check out your local credit union.

    • Credit unions can be awesome places to open a checking account!

      But I don’t have them listed here because they aren’t all online and they don’t all have free checking. Some credit unions are better than others.

      For sure though, if you have a credit union close to you, check them out and see what the details of their checking account is and see if it works for you (I say close because many credit unions are local to an area).

      • USAA rules. I can use the app on my phone to do everything, even scan checks to deposit. There are so many other services too, including investing advisors and lots of assistance when buying or selling real estate and cars. Unparalleled customer service is the biggest advantage, the myriad of quality and affordable services offered is a huge plus too. I also have auto insurance there, which I highly recommend. A nice little extra is very good, very cheap, roadside assistance. Forget AAA, too expensive. The catch is that some of these services are only offered if you or a spouse or parent is or has been in the military, like my Dad was. I know that the banking and investing part is for everyone! Seriously, almost worth serving for all USAA offers. Saved buying checks that I so rarely used, at my local credit union because they will print up to ten temporary checks that look just like regular checks when I request them from time to time.
        Thanks Glen! Awesome work, hope you win People’s Pluto!

  10. I use ING currently and love it. I can’t wait until they get the depositing checks from home thing done. The only concern I have with ING is that they were bought by Citi and I am worried that the bank I have grown to love because of it’s non-resemblance to brick and mortar banks will be ruined by Citi. My Citi credit card is my least favorite credit card due to random fees. If Citi takes the same approach with their ING acquisition, I will definitely be switching to one of the other banks listed above. Thank you for the rundown!

  11. Correction . . . it was capital one that bought ING. I have the same fear of them ruining the customer service and straight forward banking without fees I have become accustom to.

  12. I wouldn’t really call Perkstreet ‘free.’ They have a $4.50 inactivity fee.

    • You are correct. They have made a few changes not long ago. There is a $4.50 inactivity fee if you don’t use your account. All you need to do to avoid this fee is use your debit card, write a check, use online bill pay, make a withdrawal, or make a deposit.

  13. Khanh Nguyen says:

    Thank you for the info about free online checking accounts with no fees. After reading it, I signed up with PerkStreet Financial. I tried to signed up with a major bank, but there was all kinds of unnecessary blocks, not to mention fees.

  14. Jerry Van Brimmer says:

    I am now in the process of moving my checking and savings accounts to Ally from CapitalOne360 (ING Direct). My reasons are: 1) deposits are on hold for 5 days AFTER the transaction is complete. In this online world today, why on Earth do they need a 5 day hold on online, bank-to-bank transfers??? 2) lower interest rates than Ally. 3) fewer free ATMs in my area. Ally reimburses any ATM fees. I am also moving my Sharebuilder IRA (with investments) to Fidelity. Why? 1) because I am vacating CapitalOne, 2) online trade fees are lower ($7.95) than Sharebuilder. Ally also has the eCheck Deposit perk that I am looking forward to using. To each his own.

  15. David Vinson says:

    GoBank is a good free online account too from Green Dot.

  16. I never understood why people would pay to store their money some where. I have an account with PNC and love them. They reimburse all ATM charges regardless who is charging. No minimum requirements. Granted this may be because I have direct deposit with them but I am not worried because I would do that anyways. I do not want to stand in line or go to an ATM to deposit a check. They also have a web application that allows you to deposit up to $2,500 just by taking a picture of the front and back of the check.

    • Glen Craig says:

      More ‘traditional’ banks are catching on to how popular online banks have become. You still have to go with what works best for you and that really has a lot of factors including what banks are near you and how they bank. What’s nice about the online banks is you don’t have to worry much about location. But there are still other accounts that are good out there.

  17. This is very timely! I need a second account for my web stuff. How appropriate that it be an online bank, hmmm?

  18. Great reviews! EverBank’s yield guarantee sounds very enticing.

  19. Mike Allen says:

    Excuse my ignorance, I’m totally new to this, but how you fund your online checking out with cash, or deposit cash into it? I’m really not comfortable depositing cash into an ATM. I’d like to see the face and read the name tag of the bank teller taking my money. Are there ways to deposit money into an online checking account in person? Have anyone heard of Kasasa or have a 2 cents to share about them? Much appreciated.

    • Glen Craig says:

      It depends on the bank. For some you connect an outside account, most likely from another bank. Then you electronically transfer the money. For others you can scan the check in. Some account have a traditional bank aspect. Capital One is getting there with their acquisition of ING and their 360 Checking accounts.

      I know how you feel about seeing a real teller. I felt the same way when I opened my first online bank account over a decade ago. But I’ve never had any issues with my accounts and it’s nice to not have to drive out to a bank location, especially with the kids in tow, just to deposit a check. I haven’t heard of the bank you mentioned yet. I’ll be taking a look, thanks.

      • Mike Allen says:

        But that defeats the purpose of having an online account in the first place! If I’m going to have a brick-n-mortar checking bank account to deposit cash, I might as well keep it for other purposes like writing and depositing checks. Either way, I’m going to have to pay fees for it anyway.

  20. What about Bluebird from American Express…Smart phone app can deposit checks with the click of a button…no fees…great customer service. If I went with an online bank I’d go with American express.

    I’d say that there are probably far too many fantastic online checking/savings accounts online to even compare or list the top 5 or 10…

    • Glen Craig says:

      Bluebird certainly looks interesting. I’ll definitely give it a look. Thanks for sharing your experience.

  21. You need to update the Capital360 review to reflect that they offer scanning and uploading of checks now too. I use it all the time and it works perfectly. They are my favorite bank.
    That said, I work in a brick and mortar bank and if you think those interest rates paid are laughable, imagine being required to sell them! I always wish I could tell people to just take their money to an online bank.
    However I do have an account at a regional bank that offers a completely free checking account with many of the same perks as the online bank accounts.

  22. christopher shank says:

    I must disagree with your assessment of USAA.
    They do not make funds deposited at the UPS Store available for 5 BUSINESS DAYS (that’s seven calendar days) from the date of the deposit. Their customer will not make the funds available to you sooner. Unless you don’t need your money right away after you deposit it and don’t mind “loaning” it to USAA for a week, then go ahead but i’m taking my business elsewhere.
    (You cannot qualify for online or mobile deposit unless you have a USAA credit card or insurance and those services are reserved for military members).
    STAY AWAY FROM THIS BANK. IT’S HORRIBLE.

  23. Hi, I was wondering about the capital one 360 checking account, is there an inactivity fee? and will I be able to withdraw cash from it? Another question, if I get paid by cash, can I get a money order and send it through the mail to my 360 account? I am not sure if you already answered this, but with 360 are ALL ATMs free to use? Plus, how long does it take for the money to be available after the deposit? I am seriously considering changing to 360, so I would realllllly appreciate answers. Thanks

  24. Sorry, but I have one more question…I noticed bluebird wasn’t on your list. Is it not good? and between bluebird and the ING account which one do you think is better and why?

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