October 12, 2021

What are the best checking accounts?

How to choose a checking account that works hard for you.

Checking accounts can be very personal. Everyone has their own style of banking, and your checking account should support how you like to bank, without charging you for it.

Some people like to write lots of checks every month, while others rely purely on electronic transfers and automated payments. Different banks and credit unions charge account fees for different services. Make sure your choice reflects your own use.

How do I choose the best checking account for me?

Across the board, it's a good idea to avoid fees and surcharges on day-to-day transactions. Everyone has their own checking account habits, so make sure your choice doesn't charge you for them. 

Also, regardless of how you use a checking account, avoid banks or credit unions that charge monthly maintenance fees, teller visit fees and out-of-network ATM fees. Some financial institutions require fees for services that used to be commonplace. Don't make assumptions about what's included in any new checking account, from charges for non-sufficient funds to charges for ATM withdrawals to minimums for an opening deposit.

If you prefer to bank online, start by checking out the app or mobile banking site. Double-check you can use the mobile app on your devices. Some banks charge for mobile check deposits or charge extra when you transfer between accounts. If you like to bank online or use online bill pay, try to skip accounts with charges for these. Look for ones that make sign up easy for new customers like you. 

If you prefer to write paper checks, want paper statements and rely on physical branches, make sure your choice provides these services for free. 

If you rely on direct deposit, check that no fees are attached for the service, and if you've used overdraft protection in the past, see the potential charges you're facing if you need it again.

A checking account that earns interest is always a bonus -- but make sure charges and fees don't wipe out your potential earnings. Some interest-bearing checking accounts also have minimum balance requirements in order to earn the APY (annual percentage yield)

Every checking account on your comparison list should be FDIC-insured up to $250,000. At credit unions, look for insurance from the National Credit Union Administration.

Regardless of how you bank, online or in person, customer service should be easy to access. Online FAQs are rarely enough, especially when you have an urgent question or your funds are tied up.  

Should I have more than one checking account?

One checking account is typically enough for one user. But if you're married or partnered and want to access funds jointly, a second or third checking account might make sense. There's no impact on your credit score, and if you can manage the extra balances and fees, there might be no downside. 

However, adding a new account holder might be easier than opening and managing a new checking account.

And if you own your own business and need to keep funds separate from your personal finances, a bank account distinct from your personal checking account can help keep your accounting aligned and accurate.

What about perks and convenience?

If the fees and charges agree with you, see what other checking account offers are available. Some offer perks, like cashback debit cards and ATM fee reimbursements. Rewards checking accounts can be a smart option too, especially when the perks translate to actual savings.

Some people prefer keeping all their accounts in one place, from essential checking to brokerage services. You might find more accessibility to your funds if they're all under one roof. Easy access to savings accounts, money market accounts or other deposit accounts within the same financial institution might make a big difference, depending on your need.

If you travel a lot, foreign transaction fees can be a deal breaker. Outside the US, the fee on debit card transactions can vary widely from the fee on credit card purchase or a cash advance. 

                                                              What's better: Credit vs debit cards.

What’s the difference between a debit card and credit card?

Keep in mind that getting a new checking account is not the same as getting a new credit card. You might have a new card in hand, and it might even be issued by Visa, MasterCard or another familiar issuer. But debit card purchases are different from purchases made with a credit card: the funds for your purchase are withdrawn from your checking account within a few days, affecting your daily balance. 

What's the difference between traditional and online banks? 

Retail banking is a competitive business. Both traditional and new banks want to work with you, so make sure to compare their new checking account offers. 

Traditional banks like Wells Fargo, Bank of America, U.S. Bank, PNC and others may promote their stability, but any bank you use should be backed by FDIC insurance.

Newer banks like Ally Bank or Axos Bank may promote their expertise in online banking, but make sure you're comfortable with their lack of brick-and-mortar bank locations. 

Learn about the ATMs you depend on too. Some, like MoneyPass ATMs and Allpoint ATMs, are part of networks that charge a fee upfront, but your bank might reimburse you. See if your new checking account offers ATM fee rebates.

Recommended Readings:

Ways to Save Money on a Tight Budget

7 ways gig workers can budget smart

Pranay Chirla
Technical Content Writer
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