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!
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.
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.
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.
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):
This 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.
USAA 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.
Everbank 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.
Ally Interest Checking Account
Ally 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.
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.