Ask the expert: Is free checking really free?

Q: I'm a little confused by what people mean when they talk about "free" checking accounts. As far as I can see, every checking account has some form of fee or other. What exactly does the word "free" refer to?

A: Typically, "free" checking refers to a checking account which has no monthly maintenance fees. However, it is worth noting that even these free accounts are almost certain to have other kind of fees, tied to the nature and volume of your activity. Whether you end up being charged those fees depends on how you use the account.

Here are the three major types of checking account fees:

  • Monthly maintenance fees. According to the most recent MoneyRates Index fee survey, these fees average $11.75 a month. Still, you can avoid them altogether, since just over a third of checking accounts do not charge these fees.
  • Overdraft fees. At an average of $28.85 according to the most recent MoneyRates Index survey, these can be the most expensive form of checking account fees. You can avoid these by developing good record-keeping and budgeting habits. If you need to force yourself into those habits, try opting out of overdraft protection.
  • ATM fees. Banks typically won't charge you for using an ATM within their own network (which may include network alliances with other banks), but if you use an out-of-network ATM you may be subject to two forms of fees--a fee from the bank that owns the ATM, and a surcharge from your own bank.

In short, there is probably no such thing as a checking account that is totally free under all circumstances. However, there are plenty of accounts that can be free if you don't overdraft your account and take care to use in-network ATMs.

Got a financial question about saving, investing or banking? MoneyRates.com invites you to submit your questions to its "Ask the Expert" feature. Just go to the MoneyRates.com home page and look for the "Ask the Expert" box on the lower left.

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