The best checking accounts: Why finding one is critical
by Robert Beaupre | Money Rates Columnist
More so than any other type of bank account, checking accounts are built for action. These vehicles are designed for heavy use, with daily transactions frequently numbering in the dozens. Because of the nonstop relationship most consumers have with their checking accounts, choosing the right account is a key financial task.
At their worst, checking accounts come with high service fees, exorbitant overdraft charges and a minimum of special features. At their best, they come with no monthly fees, top-notch management tools and perhaps – if you’ve really sought out a special account – some level of rewards or interest.
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Rates / APY terms above are current as of the date indicated. These quotes are from banks, credit unions and thrifts, some of which have paid for a link to their website. Bank, thrift and credit union deposits are insured by the FDIC or NCUA. Contact the bank for the terms and conditions that may apply to you. Rates are subject to change without notice and may not be the same at all branches.
To find the best checking account for your needs, it’s critical to consider what features you need and to weigh your prospective checking accounts accordingly. The table above features a variety of checking accounts, both from traditional branch-based banks and online institutions. But before you apply for one, it’s important to understand the ways checking accounts vary.
Things to know before opening a checking account
Which details should command your attention as you shop for a new checking account? Here are some questions that you should never fail to ask before opening a new account:
- Is there a monthly fee? There was a time when “free” checking – in other words, an account that comes with no monthly service fee – was the industry standard. But as banks hit challenging times in the wake of the Great Recession, free checking suddenly become much rarer. But the good news is that these accounts still exist at many banks.
- If there is a monthly fee, can it be avoided? While it’s never encouraging to find that a bank imposes a monthly fee on their checking account, it’s common for banks to waive this charge in exchange for some actions on your part. Sometimes, doing something as small as signing up for direct deposit can waive the fee. Other times though, you may have to maintain a considerable minimum balance throughout the month. Whatever the case, it’s important to check before you write an account off completely.
- What other fees are possible? If, for better or worse, overdraft or ATM fees are part of your banking life, you should take a close look at what these will cost at your prospective bank. The same goes for any other potential charges.
- Is the bank convenient? If you favor branch visits, finding a bank with a nearby location is probably essential. If you’ve moved into the world of online banking, you may do best with a bank that has a comprehensive online presence and an ATM network that suits your travels.
- Does the bank offer the technology you need? Speaking of online banking, it’s not easy to switch to a bank with limited Internet resources if you’ve grown accustomed to an institution with a well-designed and feature-packed website or mobile app. If you’ve not tried online or mobile banking but are eager to test it out, you may also wish to find a bank that offers an array of electronic features.
- What perks come with the account? Nearly every account comes with some perks, so the key here is to find the right perks. Free checks may not be all that appealing if you write few checks each month, but ATM fee reimbursements just may – particularly if your career or vacations take you to unpredictable places and ATMs.
- Will I earn interest? Yes, Virginia, some checking accounts do still pay interest – and some may even offer a higher yield than the savings accounts and money market accounts at your local bank. Online banks are a great place to find interest checking accounts today – their lack of a branch network enables many of these banks to cut costs and offer more interest than conventional banks – though you may also find interest checking accounts at brick-and-mortar banks.
- Will my money be insured? While most reputable banks today are protected by Federal Deposit Insurance Corporation coverage (or, in the case of many credit unions, National Credit Union Administration coverage), it never hurts to double-check. Also, if the total amount of your deposits exceeds $250,000 – the per-depositor limit offered by FDIC and NCUA insurance – you may wish to consider splitting your funds between multiple insured institutions or structuring your accounts in a way that extends your coverage (a single account held jointly between a husband and wife, for example, may enjoy FDIC coverage up to $500,000).
A critical choice
There are certain items in life that, because of the number of times you will use them, should be purchased with care. As with buying an unreliable car or a bumpy mattress, choosing an ill-suited checking account can come back to haunt you quickly.
Fortunately, there are numerous online resources today that can help you compare checking accounts at a glance. (The table above, for instance, contains the details for hundreds of checking accounts.) The days of having to slog from branch to branch in search of the best checking account are over, but that doesn’t mean you should skimp on your search to find the wisest option.
Best Checking Accounts found by users like you
Have you been able to find even better Checking rates than the ones displayed above? If yes, please share them with us and other MoneyRates users! Please include the details: the name of the bank, APY, term of the Checking, when you opened the account, and whether the account can be opened online or only in the branch (if the latter, please include the location of the branch). Thank you!