Free checking accounts cost less to use and often provide most of the services you find in a fee-burdened checking account.
These Companies Offer Free Checking Accounts
Checking accounts have evolved since your grandparents’ day, but at their core they remain the simplest way to safely stow your money and pay your bills. Many consumers use automated bill payment and personal financial software, reducing the need to write a bunch of paper checks each month. Nonetheless, we turn to checking accounts to keep track of our spending money, and are well assisted by online accounts and mobile banking apps. Best of all, some banks provide free checking and offer goodies such as overdraft protection and interest on high balances. Here is the lowdown on six free checking accounts:
Capital One
Capital One has gained a first-rate reputation as an online bank, but you might be surprised to learn it has brick-and-mortar branches scattered throughout the country. The bank offers Capital One 360 free checking, supported by more than 40,000 free ATMs nationwide, as well as online and mobile banking.
One of the best features offered by Capital One 360 checking is robust overdraft protection, which includes the following options:
Auto-decline: The bank declines all transactions that would cause an overdraft. Any returned checks are subject to a non-sufficient funds fee of $9. There is no fee charged on pre-authorized transactions, such as gas station purchases, that cause an overdraft. This is the default option for Capital One 360 checking accounts.
Free savings transfer: You authorize transfer from your savings or money market accounts to cover overdrafts. Subject to monthly limits.
Next day grace: The bank will consider covering your overdraft for one day. It charges a $35 overdraft fee per transaction.
Overdraft line of credit: This is a revolving credit line that covers overdrafts. You only pay for open balances – the variable interest rate is 11.75 percent APR.
Miscellaneous fees on the Capital One 360 checking account include:
Cashier’s check: $20
Stop payment: $25
Outgoing wire transfer: $30
Archived statement copy: $5
Pros
No-fee online checking with no minimum balance and consumer-friendly overdraft policies
Pay bills using checks, free MasterCard debit card, transfers, online bill payment and smartphone app
Capital One Wallet is a mobile budgeting app that is useful for organizing your spending, tracking your receipts and freezing your debit card if necessary
Deposits via ATMs, mobile check deposit, direct deposits, transfers and bank branches
Generous interest on balances range from 0.20 percent to 0.90 percent APY, with no minimum balance
First book of 50 checks is free
Maintains 11 Capital One Cafes that are a hybrid of a bank branch and a coffee shop
No foreign transaction fees
Cons
Branches only in D.C. and eight states (CT, DE, LA, MD, NJ, NY, TX, VA)
Limit of one free checking account per customer
Additional books of checks cost $5 each
Only some of its ATMs accept cash deposits
USAA
The United Services Automobile Association was formed in 1922 by 25 Army officers in Texas to provide mutual self-insurance of their vehicles. Today, USAA has over 11 million members and has grown into a multi-service financial company. It provides banking services through the USAA Federal Savings Bank, which is an online bank except for its sole branch in San Antonio, Texas.
USAA offers a free checking account to members who are qualified to purchase insurance policies – that is, members and former members of the military and their families. The account gives members access to 10 free monthly withdrawals from 60,000 ATMs, as well as up to $15 a month in ATM fee reimbursements. The required initial balance is $25, but there is no minimum balance thereafter.
The USAA checking account offers a few special benefits to military members:
The bank will fill out Form 1199A on your behalf. This form authorizes direct deposit of paychecks.
The $25 initial balance is waived for new recruits.
The bank will deposit money into checking accounts ahead of schedule for members who receive early pay information from Defense Finance and Accounting Services.
Miscellaneous fees on the USAA free checking account include:
Cashier’s check: $5
Stop payment: $29
NSF: $29
Overdraft: $25, up to two per day
Outgoing wire transfer: $30
Foreign transaction fee: 1 percent
Statement copy: $10
Pros
No monthly service fee or minimum balance
Free direct deposits, transfers and bill payments
Wide ATM access and fee reimbursement
Online banking, plus mobile banking app operating under iOS, Android and Windows Phone, works with Apply Pay, Android Pay and Samsung Pay wallets
Mobile check deposit
Industry-leading logon security including biometrics, computer recognition, CyberCode texts and Quick Logon
Overdraft protection via transfers from a USAA savings account or credit card
Balances of $1,000 or more are paid interest
Cons
Only one branch
Must first qualify for USAA insurance coverage
$600 daily ATM withdrawal limit
Simple
Simple is a branchless online bank that offers free FDIC-insured checking accounts with bill-paying services. Simple is owned by BBVA Bancorp Bank and charges no fees, but rather makes its revenue by earning interest on customer deposits and by collecting interchange fees from the use of its debit card.
As its name implies, Simple’s only offering is an online checking account that deposits customer funds into an account maintained by Bancorp Bank. Simple accounts are available to U.S. citizens and permanent residents who are at least 18 years old and have obtained a Social Security number. The checking account does not issue printed checks and pays no interest. You can deposit funds into the account via ATMs, mail, direct deposits or a mobile app’s photo-check feature. There is no way to deposit cash, but you can deposit a money order. Simple’s Bill Pay prints and mails checks, or makes electronic payments, for free.
There are 50,000 ATMs in the network (Allpoint) that Simple uses. There is no charge to use in-network ATMs, but out-of-network fees are not rebated. You can use the Simple Visa Debit Card to get cash back from participating merchants, and you can transfer money for free via Simple Instant. Applications like Quicken and Mint will accept downloaded transactions from your Simple account. You can, if you wish, connect two individual accounts into a joint account. You can establish goals tied to particular expenses and use the Safe-to-Spend feature to see how much money you have left over for discretionary purchases. Simple’s mobile app also lets you generate activity reports and search for transactions.
Pros
No minimum balance or maintenance fees
No fees for overdrafts, ACH bank transfers, account closings or card replacements
Large no-fee ATM network
Free Visa debit card
Cash back on certain debit card purchases
Convenient mobile app
Cons
International debit card transaction fee of up to 1 percent
Can’t deposit cash
Can’t pay some payees, such as the government
Ally Bank
Ally Bank, headquartered in Utah, is a highly regarded online bank that offers no-fee, interest-bearing checking. It holds more than $63 billion of customers’ deposits. The branchless bank is insured by the FDIC and a mobile app is available. The forerunner of Ally Bank began doing business in 1919 under the name General Motors Acceptance Corporation (GMAC), a division of GM. In 2000, GMAC opened its Ally Bank subsidiary, and in 2009, renamed it Ally Financial. The bank underwent an IPO to become public in 2014.
Ally’s checking account has low fees and pays interest. Balances below $15,000 earn 0.10 percent APY, while higher balances earn 0.60 percent. You get free use of the Allpoint ATM network and receive ATM reimbursements of up to $10 per statement cycle for out-of-network ATM usage. You can deposit checks remotely using Ally eCheck Deposit program in conjunction with your mobile device’s camera, and you can use PopMoney to wire money.
While many services are free, Ally Bank does charge fees on the following items:
Overdraft item returned or paid: $25 (maximum of one fee per day)
Returned deposit item: $7.50
Stop payment: $15
Overnight bill payment: $14.95
Same-day bill payment: $9.95
Outgoing domestic wires: $20
International transaction: up to 1 percent
Account research fee: $25/hour
Pros
No minimum balance or monthly maintenance fees
No fees for ACH transfers, overdraft transfers, debit card, incoming wires, postage-paid deposit envelopes, cashier’s checks and standard checks
More than 43,000 free ATMs
The account can be opened as a trust
Overdraft protection is available via account linking
Cons
There is a $10 charge for every outbound transfer (excluding checks) after you do more than the allotted six free transfers per statement cycle
There is no way to deposit cash
GoBank
GoBank is not really a bank, but it is a very good online checking account. It arose from a 2014 deal between Walmart and Green Dot Bank, a unit of Green Dot Corporation, which is a large provider of debit and prepaid cards from MasterCard and Visa. GoBank is unique in several respects:
It doesn’t offer savings accounts
It doesn’t deny accounts to customers with bad credit
The checking account it offers is built around a mobile smartphone app
Overdrafts are not allowed
The GoBank checking account appeals to consumers who want a low cost banking solution and who prefer to bank through an app than via a bank. Signup is free online or through the GoBank app. You can also join at a Walmart store by buying a $2.95 “starter kit” that includes a debit card and requires a $20 minimum deposit.
You can deposit up to $2,500 a day in cash, but limited to a total of $3,000 for 30 days. Account balances cannot exceed $50,000. You can deposit cash for free at a Walmart register (excluding Vermont locations), or for a fee at participating retailers. Direct deposits are available up to two days early. If you have excess cash in your checking account, you can transfer some to a Money Vault, which is like an interest-free savings account.
You can make photo check deposits using the GoBank mobile app, but your first deposit must be made via some other method. Mobile deposits are subject to certain limitations:
Personal Checks: The first mobile deposit is limited to $500, and subsequent ones are limited to $2,000. Personal checks take 10 days to post.
Government checks: Limit of $5,000 per check, with the money posting by the next business day.
Commercial checks: Initial deposit is limited to $5,000, and $10,000 thereafter. Checks may take from 1 to 10 business days to post.
Prohibited checks: You cannot photo-deposit checks not made out to you, checks made out to “Cash”, foreign-currency checks, unsigned checks and fraudulent checks.
GoBank accounts offer free cash withdrawal within a network of 42,000 ATMs. You can pay bills via the online website, paper checks, your debit card or the mobile app. You can also set up recurring payments. Use online or mobile banking if you want to transfer money to another individual via email or mobile number. The money is deposited directly into the recipient's GoBank account, or into a PayPal account.
Here is a rundown of GoBank’s fees:
Monthly fee: $8.95, but waived when you receive direct deposits of at least $500 from employers or the government
No charge for direct deposits, photo-check deposits or deposits at a Walmart register. It costs $4.95 to add cash at participating retailers
ATM withdrawals are free within Walmart’s network, $2.50 otherwise
Teller cash withdrawal fee: $2.50
Foreign transaction fee: 3 percent
Paper check fee: $5.95 for pack of 12 checks
Pros
Free checking subject to direct deposit requirements
No credit check to open an account
No charge for overdrafts, no NSF fees and no ongoing minimum balance
Convenient mobile app
Large ATM network
Free cash back on debit card purchases
Special account for Uber employees
Cons
Cash deposit fees at non-Walmart retailers
$2.95 starter kit to open the account at Walmart
$8.95 monthly fee if you don’t meet direct deposit requirements
Out-of-network ATM fees are not reimbursed
Paper checks must be preauthorized and cost about 50 cents each
EverBank
Founded in 1961 in Jacksonville, Florida, EverBank is a diversified financial company that operates through branch offices, an online website and a mobile app. EverBank was purchased in 2002 by Alliance Bank but retained its name.
EverBank offers a basic checking account with low fees. It owns virtually no ATMs, but reimburses ATM fees for customers with balances of at least $5,000. It requires an initial deposit of $25 to open a checking account, but there is no minimum balance. You can deposit money at a branch, via the mobile app, by check or ATM. Withdrawals are available through ATMs, paper checks, debit card, bill payment and transfers.
Fees at EverBank include:
Monthly fee of $5 (waived for New York residents or if average daily balance is $25 or greater)
ATM out-of-network fees unless you maintain an average daily balance of at least $5,000
NSF fee: $30, limited to two per day
Uncollected item fee: $30
Returned deposit fee: $10 (waived in New York and Vermont)
Stop payment fee: $30
Cashier’s check: $10
Online/mobile deposit fee: $0
Outgoing wire funds: $25 domestic, $35 international
EverBank also offers an interest-bearing checking account called Yield Pledge Checking. The minimum initial balance is $5,000. The account pays a one-year introductory APY of 1.11 percent on balances up to $250,000. After that, interest rates vary from 0.25 percent to 0.61 percent, depending on the balance. The bank pledges to pay yields in the top 5 percent of those offered at all competitors.
Pros
Reimbursed ATM use, subject to minimum account balance
Easy-to-waive monthly fees
Low minimum opening deposit
Cons
Must keep a $5,000 balance to collect interest and avoid ATM charges
Only nine in-network ATMs
Cannot deposit cash in out-of-network ATMs
What Is a Checking Account?
Financial institutions such as banks and credit unions offer checking accounts as a means of safely storing money and paying bills. They are called demand accounts because you can withdraw your money on demand. The functions associated with a checking account include:
Receive deposits: Money can be deposited into a checking account in by various means. You can deposit cash at a bank branch or an ATM. Checks, which are formatted paper drafts authorizing payments from a checking account, can be deposited at branches, ATMs, through the mail, and in many cases, through the remote check deposit functionality of banking apps, in which you take a photo of the check and transmit it to the bank. A wire transfer is an electronic deposit sent from another account. A direct deposit is a wire transfer that is automatically deposited into your account, often on a regular schedule, by a government agency or an employer. ATMs accept check deposits, but some do not accept cash deposits.
Pay Bills: You can use the money in your checking account to pay your bills. You can write and send a paper check to a payee, and you can make electronic payments online or via an app-driven bill payment feature. Debit cards are usually issued with checking accounts, and you use these cards to pay bills with money drawn directly from your checking account. You can also pay bills by wiring money out of your account. Digital wallets can be hooked into your checking account and used much like a debit card. Many banks and independent apps provide person-to-person transfers that allow you to send checking account money to any recipient. If you use personal financial software like Quicken, you can have the program print and mail paper checks on your behalf, or, when feasible, make electronic payments directly to your payees.
Store your money: Most checking accounts are insured for at least $250,000. Bank accounts are insured by the Federal Deposit Insurance Corporation, and credit union accounts via the National Credit Union Administration. Your checking account balance is the excess of your deposits over your withdrawals. By storing your cash at the bank, you don’t have to worry about theft, loss or physical damage. Some checking accounts offer interest on deposits, so you can earn money by keeping your money in the bank.
Get cash at ATMs: ATMs allow you to access cash from your checking account at any time. You swipe you ATM or debit card, press a few buttons and receive cash. In-network ATM transactions are free, but you may have to pay for out-of-network usage (which some banks and credit unions reimburse). Most ATMs have built-in video cameras that record activity. This helps deter and catch muggers who force you to withdraw money from your account. Newer designs of ATMs provide for biometric identification of customers – fingerprints, retinal scans, face recognition, etc. – that promises to make ATM usage more secure and convenient.
Why Do Online Banks Offer Free Checking Accounts?
There are currently a handful of Internet-only banks competing for your banking business, and one way they do that is through free checking accounts. Here are three reasons why online banks want you to keep your money in their checking accounts:
1. Lend it Out: Banks make money by taking in deposits and then lending them out to earn interest income. Online banks, because they don’t have local branches, have to work harder to attract your deposits. They do so by offering perks like free checking, ATM fee reimbursement, interest on checking, and other goodies. Because they have a low cost structure (by avoiding the costs of owning and running branches), online banks have good profit margins and thus benefit from attracting as many deposits as possible.
2. Collect fees: Notwithstanding Reason 1, banks have thin profit margins when interest rates are low. To bolster income, many banks turn to fees, such as overdraft/NFS charges, foreign transaction fees, and so forth. Banks can’t collect these fees unless you have an account with them, so free checking serves much like nectar to a bee. Online banks rely less on fees because they have better profit margins, so they can afford to offer free checking accounts.
3. Loss Leader: Just like any other retailer, banks offer some discounted products, called loss leaders, which attract customers who, the banks hope, will buy other, more profitable products once they are in the tent. A free checking account is a crowd pleaser and banks know it. Their strategy is to establish a relationship with a customer by giving away a checking account, and then attempting to upsell the customer with products like loans, insurance, annuities and so forth.
How Do Free ATM Networks Work?
Banks connect to ATMs via interbank networks, which are computer networks that allow bank customers to use an ATM if they have the appropriate debit or ATM card. ATMs first came to the U.S. in 1969 and proved very popular, causing banks to set up small ATM networks. Soon, the country was brimming with fragmented interbank networks, and pressure developed to consolidate these into larger, more efficient networks. This did indeed occur, and now the largest U.S. ATM networks include STAR, NYCE and Pulse.
There are many costs associated with building and operating an ATM network. Networks compete with each other for a bank’s ATM business, and offer discounts to become a bank’s preferred provider. The banks offer checking account customers free usage of in-network ATMs, which encourages customers to use the bank’s ATMs, benefiting the underlying interbank network. Customers who use out-of-network ATMs are assessed a surcharge, often as high as $2.50 or more per transaction. Some banks and credit unions reimburse all or part of the out-of-network charges. You can save several hundred dollars a year by choosing a bank account that reimburses all out-of-network ATM surcharges.
Advantages of Free Checking Accounts
A free checking account gives you all the benefits of a checking account without the monthly fees. This provides you with several advantages:
Cost Savings: Why spend $5 or $10 a month simply to own a checking account when so many banks will provide you one for free? This is especially important when you keep only a small amount in the account, because fees will put a relatively big dent in your balance. You also get to use the bank’s ATM network for free. Many free checking accounts also provide reimbursements for fees you encounter when using an out-of-network ATM.
Income: Some checking accounts pay you interest, which means they are better than free. You’ll have to comparison-shop to find the best deals, but some banks and credit unions pay more than 1 percent APR on balances that exceed some minimum.
Convenience: A checking account helps you keep records of your cash flows. You can review your transactions and even assign them to different categories so that you know how to update your budget. You checking account records also make it easier to file your taxes. You can carry around your checkbook or debit card instead of cash that can be lost or stolen without a trace. If you lose your checkbook or debit card, you can instruct the bank to freeze and replace them – try doing that with cash! Many free checking accounts provide full online and mobile service, including remote check deposit and activity alerts.
Disadvantages of Free Checking Accounts
It costs banks money to create and maintain checking accounts, so when you get a free one, don’t be surprised if the banks nickel and dime you in other ways.
Fees: You have to watch out for high overdraft fees. You could easily spend $25 or $50 for each bounced check. There may also be fees due if you don’t maintain the checking account’s minimum balance.
Credit rating: Using a checking account responsibly generally won’t earn you higher credit scores from the major credit bureaus, but bounce a check and your score suffers. Your credit score already reflects the assumption that you will cover all your checks. Contrast this to credit card usage, where good habits can lift your credit score.
Security: When you write a check, the recipient knows your checking account number. Since most individuals will accept a check as a form of payment (but won’t accept credit cards), there is always the chance you’ll be writing a check to a scam artist who may use the information to steal your identity or forge checks on your account.
Tracking: If you like to keep below the radar, you don’t want to use checks, because they can be tracked by banks and other organizations. Instead, you stick to cash only, which can’t be traced. You might do this to avoid a constant flow of advertising generated from information gathered about your spending habits.
What Paperwork Do You Need to Open an Online Checking Account?
Not surprisingly, you usually open an online checking account, well, online, although some banks require you to call first. In a typical account-opening procedure, you start by providing your email address. You’ll next be asked to enter your personal information, including:
Choice of single or joint account
Name
Date of birth
Social Security number
Country of citizenship (primary and secondary)
Employment status
Job title
Annual income (or income range)
Home address
Phone number
IRS backup withholding status
You’ll then be asked to read through a number of agreements and certify that you’ve read them. These may include:
1. Electronic Delivery Disclosure Notice: In this type of notice, you agree to accept electronic delivery of all disclosures and statements. In many cases, printed versions of the notice are not available, although you can print off the web page yourself if you want a written copy. Sometimes, the bank will have a policy to mail you a copy of your statements if you make a request. The bank will also mail you disclosures if it cannot deliver them to you electronically. The typical list of disclosures include:
Account opening documents
Annual notices regarding electronic fund transfers and privacy policies
Change-in-terms information for your account
Maturity of your time deposit account
Notices related to any dispute you might raise under the Electronic Funds Transfer or Truth in Lending Acts
Other disclosures
Preauthorized electronic funds transfers
Statements
Year-end tax information
2. Checking Account Disclosure: Provides a variety of information, including:
Initial deposit requirement
Rate information if the account pays interest
Transaction limitations
Customer eligibility
Types of accounts
Account-opening procedures
Right of bank to collect your personal information from a credit bureau
Account features
Fund availability and transfer rules
Overdraft services
Legal language regarding collections, liens etc.
Account fees
Privacy policy
After you confirm all the information entered, you’ll be asked to fund your new account. Banks typically don’t consider an account opened until it is funded. Usually this involves transferring money from another account.
Of course, each bank may require more or less information than what we’ve outlined. Generally, you can expect to open an online checking account in about five minutes.
Why Should Students or Young Adults Open Free Checking Accounts?
We can provide the answer in two parts – special deals and character development:
1. Special deals: Banks like to snag new customers at an early age, because often it will hold onto these customers for a long time. Therefore, many banks offer special checking accounts to (often cash-strapped) students who provide proof of enrollment. These accounts may feature free online bill pay, low minimum balance (as low as $25 or $50), zero monthly fees, free or rebated ATM use, free checks, overdraft protection, free debit card and online/mobile features such as mobile check deposit and automatic transfers. It’s important to read the fine print and make sure there aren’t any extra charges that will be assessed.
2. Character development: Whether you are a student or not, opening a checking account at an early age can help you develop your character and teach you about personal finance, including:
Responsibility: You have the opportunity to show that you can manage a checking account responsibly, which basically means avoiding overdrafts. You can also experience the (financial) pain of irresponsible actions. Hopefully, you’ll learn from your mistakes and develop your sense of personal responsibility.
Good habits: If you are committed to avoiding overdrafts, then you will be more likely to develop the good habits necessary to avoid overdrafts. These include neatness, organization, and statement reconciliation each month. Failure to develop these habits means you won’t catch items such as identity theft on a timely basis, which makes the problem much worse. The good habits you develop managing your checking account will have a broad application throughout your life.
Control: By tracking and budgeting your expenses, you can exert control over your lifestyle and live within your means. You will quickly learn the downside of impulsive purchases and the rewards for saving toward a goal. You’ll quickly figure out that you aren’t so much a victim of circumstances as you are the captain of your own ship.
Opportunity costs: Saving a checking account allows you to easily see how spending in one area reduces the opportunity to spend somewhere else. What better way to learn about life’s trade-offs and opportunity costs?
Independence: You, not your parents, are managing your checking account. That bestows a certain level of maturity and independence that lets you move on with your life. A young person can gain a sense of importance by having a checking account, reinforced every time a check is written and accepted.
Common Checking Account Fees to Avoid
If you are already living on a tight budget, the last thing you want to do is pay avoidable fees to the bank. After all, it’s better to have the money stay in your pocket than go into theirs. Here are some common checking fees you should avoid:
Maintenance fees: If you don’t do your research, you can end up with a checking account that charges up to $12 a month in maintenance fees. You might receive a waiver on this fee if you maintain a specified minimum balance, receive a set number of direct deposits each month or perform a minimum number of debit-card transactions during the month. The best route is to find a bank that doesn’t make you jump through hoops to get a free checking account.
Minimum balance fees: Many banks require you to maintain a minimum balance each month to avoid maintenance fees or earn interest on your checking balance. If you fall below the minimum, you could be forced to cough up a minimum balance charge. Pick a bank/credit union with a low- or no-minimum-balance policy, and set up direct payment of your paychecks or benefit checks to help ensure you meet the minimum balance requirement.
Overdraft fees: These can be a killer. Some banks hit you with a charge exceeding $50 an incident, with no daily limit. Pick a bank that offers one or more overdraft services, such as linkage to another account or a special overdraft-protection credit account. Some banks simply refuse payments that would cause an overdraft, meaning you won’t have to pay the fees, but you might be blocked even if you are overdrawn by only one cent.
ATM fees: If you tend to use ATMs frequently, pick a bank that has a large network of free ATMs, or at least reimburses you for your out-of-network ATM use. Those fees can approach $3 per transaction –ouch! Depending on where you live, you might not have access to many different ATMs. In that case, it might be a good idea to consider an online-only bank or credit union checking account that uses a large network of independent ATMs. Take note of your bank’s ATM-reimbursement policy, including any cap on the reimbursed amount. Also, get a debit card from the bank and identify local merchants who will give you cash back when you make a purchase with the card.
Returned deposit fees: If someone bounces a check on you, the bank may add insult to injury by charging you a returned-deposit fee. This can happen when the payer has insufficient funds, closes the account, stops payment, or writes an incomplete check. Some banks may waive this fee or keep it low.
Online-bill-pay fees: Online bill pay is a great convenience, and many banks don’t charge for the feature. Other banks do assess a charge, but may waive it if you meet certain other requirements, like a minimum balance or number of direct deposits each month.
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