How to find the best checking accounts for August 2023
A checking account is an essential tool in your financial life. It’s where you deposit your paychecks and how you pay your bills. And if you have the wrong checking account for your needs, you could end up paying unnecessary fees.
The best checking accounts have low minimum balances, no monthly fees, and widespread ATM networks, so you can access your money without added charges. What options are available vary by location, so here is what you should look for when researching checking accounts.
1. Understand your needs
All checking accounts have the same basic features: They allow you to deposit and withdraw money, and you can withdraw via check, debit card, or electronic transfer. But what kind of account is a good fit for you is based on your banking preferences.
There are several types of checking accounts. Depending on the bank you choose, you may have the following options:
Student checking: These accounts are intended for children or college students. They usually have low minimum deposit requirements and no monthly fees.
Senior checking: Senior accounts are for older adults, such as those 55 and older. They have low balance requirements, and they rarely have monthly fees.
Free checking: A free checking account is open to anyone 18 or older. These accounts do not have monthly fees, so you can accept and make payments without paying service fees.
Interest checking: Most checking accounts are not interest-bearing, so the money you keep in there won’t grow. However, some interest-bearing checking accounts allow you to earn interest, but they often have monthly fees or balance requirements.
Rewards checking: A rewards checking account allows you to earn cash back or points on your purchases. For example, you may earn 1% cash back on purchases made with your debit card. However, you usually must maintain a certain balance or complete a minimum number of transactions to qualify for the rewards.
Student checking: These accounts are intended for children or college students. They usually have low minimum deposit requirements and no monthly fees.
Senior checking: Senior accounts are for older adults, such as those 55 and older. They have low balance requirements, and they rarely have monthly fees.
Free checking: A free checking account is open to anyone 18 or older. These accounts do not have monthly fees, so you can accept and make payments without paying service fees.
Interest checking: Most checking accounts are not interest-bearing, so the money you keep in there won’t grow. However, some interest-bearing checking accounts allow you to earn interest, but they often have monthly fees or balance requirements.
Rewards checking: A rewards checking account allows you to earn cash back or points on your purchases. For example, you may earn 1% cash back on purchases made with your debit card. However, you usually must maintain a certain balance or complete a minimum number of transactions to qualify for the rewards.
2. Research financial institutions
Once you know the type of checking account you want, you can decide where to open it. You can open a checking account with either a credit union or bank.
Credit union: Credit unions are nonprofit organizations, and you have to become a member to open an account. Because credit unions are nonprofits, their accounts tend to have lower fees and better rates than for-profit banking institutions.
Bank: Banks are financial institutions that are privately owned institutions licensed to offer bank accounts and loans. They typically operate multiple branches in several states, and some offer their services nationwide.
Credit union: Credit unions are nonprofit organizations, and you have to become a member to open an account. Because credit unions are nonprofits, their accounts tend to have lower fees and better rates than for-profit banking institutions.
Bank: Banks are financial institutions that are privately owned institutions licensed to offer bank accounts and loans. They typically operate multiple branches in several states, and some offer their services nationwide.
Besides those two main categories, you can also choose between online and traditional institutions.
A digital bank or credit union allows you to open an account entirely online. Since the online bank doesn’t have branches, it has lower overhead costs, and it can pass those savings on to customers through lower fees and higher annual percentage yields (APYs). But they don’t have local branches you can visit when you need help.
Traditional banks and credit unions often have online account management tools, but they also operate branches. They tend to have higher fees and lower APYs, but you can visit any branch to withdraw or deposit money.
Regardless of which type of institution you choose, make sure it’s backed by either the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA). These organizations provide deposit insurance up to $250,000, protecting your money if your bank or credit union fails.
3. Compare fees and charges
Fees vary by financial institution, so review the deposit account agreement for the checking account you’re considering to see what fees it charges. The deposit account agreement is usually available through a link at the bottom of the checking account’s page in the fine print. If you can’t find it, email the bank or visit a branch in person and request it. Common fees and terms to look out for include the following:
Monthly account fees: Monthly fees, sometimes referred to as account maintenance fees, are what some banks charge to keep your account active. You pay the monthly fee even if you didn’t complete any transactions.
Fee waivers: Some banks will waive the monthly fee if you meet certain criteria, such as maintaining a minimum balance or setting up direct deposit.
Overdraft fees: Banks and credit unions charge overdraft fees when you don’t have enough money to cover the transactions you made. The fee can be steep — according to the FDIC, it’s typically around $35 per transaction.
Non-sufficient fund fees: Non-sufficient fund fees are similar to overdraft fees. They occur when you write a check for more than you have in your checking account. The bank will decline the transaction but charge you the non-sufficient fund fee.
ATM fees: Generally, banks and credit unions allow you to use ATMs in their networks at no charge. But if you use out-of-network ATMs, they may charge you a fee (in addition to the service charges the ATM operator charges for using its machines).
Monthly account fees: Monthly fees, sometimes referred to as account maintenance fees, are what some banks charge to keep your account active. You pay the monthly fee even if you didn’t complete any transactions.
Fee waivers: Some banks will waive the monthly fee if you meet certain criteria, such as maintaining a minimum balance or setting up direct deposit.
Overdraft fees: Banks and credit unions charge overdraft fees when you don’t have enough money to cover the transactions you made. The fee can be steep — according to the FDIC, it’s typically around $35 per transaction.
Non-sufficient fund fees: Non-sufficient fund fees are similar to overdraft fees. They occur when you write a check for more than you have in your checking account. The bank will decline the transaction but charge you the non-sufficient fund fee.
ATM fees: Generally, banks and credit unions allow you to use ATMs in their networks at no charge. But if you use out-of-network ATMs, they may charge you a fee (in addition to the service charges the ATM operator charges for using its machines).
4. Think about interest rates
Checking accounts usually aren’t interest-bearing accounts, but there are some institutions that offer interest for checking accounts. However, the typical APY on these accounts is much lower than you’d get with a traditional savings account.
These accounts tend to have monthly fees or high minimum balance requirements, so they usually only make sense for those who keep a substantial amount of money in a checking account to cover their monthly expenses. Otherwise, your money will work harder for you in a high-yield savings account (HYSA).
5. Consider added features and services
Some banks and credit unions offer their customers additional features and services. For example:
Mobile banking: Mobile banking apps are increasingly popular, but not all banks have their own yet. If you prefer to use your phone for banking, check the bank or credit union’s mobile compatibility.
ATM fee rebates: Some banks and credit unions provide customers with rebates for out-of-network ATM fees. For example, you may be eligible for up to $20 per month in ATM fee rebates.
Free checks: Many banks and credit unions will issue customers their first box of checks for free.
Online bill pay: Many banks and credit unions have online bill pay services that allow you to pay your utilities, credit cards, and even subscription bills through your account. You can also schedule those payments in advance and set up recurring payments.
Mobile banking: Mobile banking apps are increasingly popular, but not all banks have their own yet. If you prefer to use your phone for banking, check the bank or credit union’s mobile compatibility.
ATM fee rebates: Some banks and credit unions provide customers with rebates for out-of-network ATM fees. For example, you may be eligible for up to $20 per month in ATM fee rebates.
Free checks: Many banks and credit unions will issue customers their first box of checks for free.
Online bill pay: Many banks and credit unions have online bill pay services that allow you to pay your utilities, credit cards, and even subscription bills through your account. You can also schedule those payments in advance and set up recurring payments.
How to open a checking account
Now that you know the factors that affect the best checking accounts, you can pick a bank and open your new account.
Whether you open the account online or in person, you will generally need to provide information about yourself so the bank can verify your identity. Below is a checklist of information and documentation you should have handy to open a checking account:
Identification, such as a driver’s license or passport
A second form of identification, such as your Social Security card, birth certificate, or utility bills listing your name and address
Your Social Security number or taxpayer identification number
Money for the initial deposit (typically between $25 and $100)
Identification, such as a driver’s license or passport
A second form of identification, such as your Social Security card, birth certificate, or utility bills listing your name and address
Your Social Security number or taxpayer identification number
Money for the initial deposit (typically between $25 and $100)
You need to fill out an application to open the account. The bank will verify your information and run a deposit account inquiry through a system like ChexSystems. If the bank or credit union approves your application, you can start using your account immediately, but it may take a few days to receive your debit card and checks.
