Banking » Compare Banks » Best Checking Accounts of November 2022
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Best Checking Accounts of November 2022

Checking account helps you to manage your day to day finance, while the rate is generally low. Here are the top checking account of 2022
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor, which helps consumers make better financial decisions.  Silvermann’s areas of expertise include investing, banking, and credit cards. Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more. Aside from being a finance expert, his background includes working as a business and financial analyst. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.

Review & Fact Check: Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Financial Expert, The Smart Investor CEO

Experience

Baruch Mann (Silvermann) is a financial expert and founder of The Smart Investor. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor, which helps consumers make better financial decisions.  Silvermann’s areas of expertise include investing, banking, and credit cards. Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more. Aside from being a finance expert, his background includes working as a business and financial analyst. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.

Review & Fact Check: Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Financial Expert, The Smart Investor CEO

Experience

Baruch Mann (Silvermann) is a financial expert and founder of The Smart Investor. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.

We earn a commission from our partner links on this page. It doesn't affect the integrity of our unbiased, independent editorial staff. Transparency is a core value for us, read our advertiser disclosure and how we make money.

Will you benefit more with a major bank whose ATM and branch locations are all over the United States?  Would you be needing more of an online bank that allows you to deposit and transfer funds electronically?

A good checking account is one with low or no fees, has access to an extensive ATM network, with a low opening balance requirement, and other features that work for you.  Throw in an interest-earning feature, if you can find one.

If you’re after a good experience, you may want to check the bank’s customer service ratings and client reviews.  These are important factors that can dictate the quality of your interaction with a bank.

Here are The Smart Investor Select’s picks for the top checking accounts:

Bank/institution
Monthly Fee
Min Deposit
Promotion

axos-bank-logo

$0
$50
$150 Use Promo Code “HOLIDAY” for a $150 bonus when you apply for a Rewards Checking account. Expired on 12/31/2022
Review

discover bank logo

$0
$0
$150 / $200 Minimum deposit required: $15,000 or $25,000 within 30 days. [/sc]
Review

capital one bank logo

$0
$50
None
Review
ally bank logo
$0
$0
None
Review
american-express-bank-logo
$0
$0
None
Review
chase bank logo
$12 Can be waived if you maintain a $1,000 minimum daily balance, making direct deposits or Associated SnapDeposits of $500 or more per statement cycle, or holding $2,500 in combined deposit accounts with the same statement cycle date or having a Health Savings Account or investment account
$0
$200 Expired on 1/25/2023
Review

How to Choose a Checking Account?

Since most banks offer multiple checking account options, choosing the right account for your needs can be a little tricky. However, there are some simple ways to identify the best accounts for you.

1. Set Your Goals

What do you want to achieve in opening a new checking account? Are you looking for easier way to manage your finance? Are you looking for higher rates on your savings? What do you expect in terms of digital experience? Do you plan to get a mortgage soon? Do you alreadu have a credit/debit card, or it's something you would like to get as part of your new checking account?

Those questions are crucial before you shop around, since every bank offers different banking options for different purposes – so make sure you know what you want before you start comparing.

2. Understand Your Options

There are multiple types of checking accounts, so you first need to determine the type of account that is best for your requirements.

  • Standard Checking: This is a basic checking account that typically offers features including a debit card, and direct deposits
  • High Interest Checking: Unlike many checking accounts, this type allows you to earn interest on any balance.
  • Cash Back Checking: These types of accounts help you to earn a little on your purchases. So, you may earn 1% cash back on spending up to a limit each month.
  • Other Checking: These are designed specifically for certain types of customers. So, there are students, seniors, business checking accounts etc.

Once you know which type of account you’re looking for, you can start to narrow down your choices.

3. Shop Around

Next, you need to think about whether you want to open your checking account with an online institution or at a traditional bricks and mortar bank.

There are many online institutions offering all the benefits of a traditional bank, but often offering high interest, cash back or other incentives. However, if you like being able to visit a branch if you have any queries, you’re likely to prefer a high street bank.

You also need to consider the accessibility. Many banks allow free ATM withdrawals, but you must use their ATM network. So, you need to ensure that your chosen institution has branches and ATMs in your neighborhood.

Another aspect of accessibility is whether there is an app to manage your account or if you can access your account online.

4. Review

Now, it's time to review every aspect that may important for you, based on your needs. Review the different fees associated with the account and make sure all the details are clear and there are no surprises. Lastly, ask the right questions in  any case of any doubt.

CIT Bank

Aspiration Bank

Aspiration's spend & save account is a cash management account that allows you to save money in a savings account and spend using a debit card. Customers can do their transactions online and via an app.

They offer one of the highest APYs for a savings account and customers can withdraw 5 times from an ATM without having to pay anything. Depositors can transfer funds from their Spend and Save accounts without limit.

Aspiration used to offer Summit account, their version of a checking account. But the bank has phased this product out and transitioned it to the Spend & Save account. This means that Spend & Save is a hybrid account that has both checking and savings account properties.

Here are the main key specs you should know about Aspiration's spend & save account;

  • Up to 1.0% APY on the entire balance of your Save account
  • No minimum balance fee (choose your own monthly fee)
  • 0.25% cashback reward on your Spend account
  • 5 free ATM withdrawals per month
  • Unlimited transfers between your Spend account and Save account

Axos Rewards Checking

On Axos Secure Website

Axos Rewards Checking

Fees

$0

Minimum Deposit

$50

Current Promotion

$150 Use Promo Code “HOLIDAY” for a $150 bonus when you apply for a Rewards Checking account. Expired on 12/31/2022

APY Checking

Up to 1.25% APY (requires monthly direct deposits of $1,500)
On Axos Secure Website

There are five types of checking accounts available with Axos Bank. These are:

  • Essential Checking: This account has no monthly fee or overdraft fees. There is no minimum balance requirement and you can enjoy unlimited domestic ATM fee reimbursements. Axos Bank can also allow you to receive direct deposit funds up to two days early.
  • Rewards Checking: The Reward Checking account has a $50 minimum balance and it offers all the benefits of Essential Checking, but there is a higher APY of 1%. However, to receive the full rate, you need to use your Axos debit card for 10+ transactions a month and receive at least $1,000 a month by direct deposit.
  • CashBack Checking: This account offers 1% cash back on all shopping purchases requiring a signature. It has no monthly fees and offers unlimited check writing privileges.
  • First Checking: This is designed for children aged 13 to 17 to help them learn good money management skills. The account offers 0.10% APR with no monthly or overdraft fees. There are daily transaction limits and parents can also impose account restrictions.
  • Golden Checking: This account is open to people aged 55 plus. There is a $50 minimum balance, but you’ll earn 0.10% APR on any balances.

All checking accounts provide access to the Axos Bank digital tools including online bill pay, and free mobile banking.

  • Savings Accounts
  • Checking Accounts
  • CDs
  • Money Market Account
  • Mortgage
  • Debit Card
  • Investing
  • Who is Axos Bank?

Axos Bank is an FDIC-insured technology-driven financial services company that offers a wide range of innovative products and services to individuals, businesses, and institutions across the country. Axos Bank is headquartered in San Diego, California, and has nearly $14.4 billion in assets.

We aim to be the most innovative digital bank in the United States, offering products and services that are superior to those of our competitors.

  • How is Axos physical coverage?

Axos is a bank that only operates online. Although Axos Bank has three locations, none of them are open to the public; the bank operates entirely online. As a result, if you're looking for a bank where you can get help from a teller in person, Axos is not the right choice for you.

  • How is Axos bank customer service?

Axos has a 24-hour helpline, but you can also chat with the Evo virtual assistant or browse the extensive support section of the website.

The Axos app can be used to not only transfer funds and manage transactions, but also to access support and manage your card. You can even use the app to locate the nearest fee-free ATM, which is extremely useful if you're in a foreign country. The Axos is rated 4.7/5 by Apple and 4.5/5 by Google.

  • How does the Axos savings account work?

If you want to start growing your savings and working towards your savings goals, Axos Bank has a few options for you. Axos offers a high yield savings account with an APY of Up to 0.61%, but it also has a number of other features.

You can, for example, request a free ATM card, but there are no monthly fees. There are no minimum balance requirements and interest is compounded daily. This account also gives you access to a number of online money management tools.

  • What ATMs are available to me?

Your account provides free ATM withdrawals at over 91,000 convenient locations across the country. Log in to online banking and use our ATM Locator to find out where you can make free ATM withdrawals near you.

Discover Cashback Debit

discover logo
On Discover Secure Website

Discover Cashback Debit

Fees

$0

Minimum Deposit

$0

Current Promotion

$150 / $200 Minimum deposit required: $15,000 or $25,000 within 30 days. [/sc]

APY Checking

0% (1% cash back on up to $3,000 in debit card purchases each month)
On Discover Secure Website

Discover Checking Accounts offer unique offerings for your banking needs.  Discover checking accounts allow you to earn cashback rewards.  You earn 1% cash back on up to $3,000 in debit card purchases monthly.

This is a unique feature along with their lack of charging fees with their checking accounts.  There are no fees for your account maintenance, ordering checks, In-network ATM use, online bill pay, or replacement debit cards.  Discover checking accounts also have no minimum balance requirements or activity requirements.  This largely benefits the customer by eliminating excessive fees, while incorporating incentives to open an account.

It is simple to deposit paper checks as well.  Discover uses a mobile app where you can easily track your spending, move your money, and deposit paper checks.  These are exclusive features through Discover that just a few amongst the many features offered to satisfy their customer.

If you prefer online banking, instead of traveling to a physical banking branch, then this is the right bank for you.  Your mobile deposit is secure and you are never held responsible for any unauthorized transactions. 

  • Savings Accounts
  • Checking Accounts
  • CDs
  • Money Market Account
  • Mortgage
  • Credit Card
  • Debit Card
  • Personal/Student Loans

What Discover products are inflation-proof?

Discover has a decent product lineup, but the products are not particularly inflation-proof. The only exception to this is the lending products. You can access personal and home loans with a fixed rate that can help you tackle increasing inflation and interest rates.

You can lock in your rate for the duration of your loan term, so you don’t need to worry about your monthly payments increasing along with all your other household expenses as higher inflation hits. Your monthly repayments will remain the same until the end of your loan.

How's Discover's physical coverage?

Discover is a purely online bank, so it does not have a physical branch network. You can manage your transactions online or using the Bank’s app. So, you will need to be comfortable with the concept of not having face-to-face support for managing your account.

What is required to open a Discover account?

Discover must comply with federal banking regulations, so you must verify your ID and address to open an account. When you complete your application, you will need to provide your full name, a valid postal address, and your Social Security number. You will also need a valid government ID, such as a passport, driver’s license, or state ID, to support your application.

Is Discover worth it if I'm a student?

Although Discover does not have a dedicated student checking account, the bank is exceptionally student-friendly. The bank has a fee-free checking account, so you won’t need to worry about a monthly maintenance fee or a minimum balance requirement.

However, where the bank excels is that it offers student loan options, and there are two student credit card options. The Student Cash Back card offers 5% cash back on activated rotating category purchases (up to $1,500 in purchases each quarter, then 1%) and 1% on all other purchases. While the Chrome for Students card offers 2% cashback at gas and restaurants (up to $1,000 every quarter) and 1% on groceries and other student related products. This makes Discover worthy of consideration if you’re a student.

Does Discover offer a free checking account?

Discover’s checking account is free of monthly maintenance fees, and there are no minimum balance requirements. There are no charges if you have insufficient funds or have a deposit item returned.

What’s more, you’ll earn 1% cash back on debit card purchases, making it a desirable option for those who want the best value checking account.

Can you get denied by Discover?

All banks assess account applications to determine applicant suitability. Discover is quite flexible with its criteria for its checking account, but there is still the possibility that a red flag on your application may trigger a decline notification.

In this case, you may need to discuss your application with a member of the support team to find out if there is anything you can do to have your application reassessed.

Capital One 360 Checking

Capital One
Capital One
On Capital One Secure Website

Capital One 360 Checking

Fees

$0

Minimum Deposit

$50

Current Promotion

None

APY Checking

0.10%
On Capital One Secure Website

The Capital One 360 checking accounts are mostly used and operated online for your optimal convenience.  You can easily pay your bills, get your cash, making deposits, and transfer your money without the added stress of a monthly fee.  This allows you to condense your banking work without extra trips to your local bank.

You can easily open your checking account online and manage your account securely by signing onto your phone or computer. You do not have to rely on waiting for your bank to open.  The hours are entirely at your disposal, which offers increased flexibility and user-based tools.

Another added benefit of opening a Capital One 360 checking account is the zero fees when opening a checking account.  There are no fees when opening, keeping, or using your Capital One 360 account domestically or for foreign transactions.  This is extremely helpful and beneficial to a traveling and busy adult.

There are also many other additions to this service.  You can receive overnight check delivery, overnight delivery of a replacement a card, and request to stop payments.  All of these are great improvements to your banking experience that limit any unnecessary stress.   

  • Savings Accounts
  • Checking Accounts
  • CDs
  • Credit Cards
  • Debit Cards
  • Is Capital One worth for Millenials?

As a major bank, Capital One covers your banking basics with the minimum of fuss. Millennials are also likely to appreciate the convenience and functionality of the accounts. Many of the accounts are fee free and you can access decent rates with savings and CD products. There is also a great app for both Android and iOS devices to help you manage your money on the go.

  • Is Capital One worth it if I have bad credit?

Capital One may decline your application for a checking account if you have bad credit. However, the bank does offer several products that can help you to build your credit. The savings accounts offer decent rates, so you can start to build up an emergency fund with no account fees or minimum balance requirements.

  • Is my money safe on Capital One ?

While the share price may have fluctuated a great deal during turbulent financial times, Capital One has remained a safe bank for your funds. The bank is FDIC insured, so customers are protected for up to $250,000 in deposits.
Capital One did receive a $3.5 trillion federal bail out in 2008, but the bank has repaid these funds in full.

  • Can you Be Denied on a Capital One Checking Account?

Capital One will go through your application form to determine if you will be approved to open an account. Unfortunately, the accounts are subject to approval, so there is a possibility your application may be denied. Capital One does not have a very basic checking account, so if you are denied, you may need to reapply after you have worked on building your credit.

  • Can you buy/invest in gold products via Capital One?

Capital One does not have an investment platform, so it is not possible to buy stocks or shares. This means that if you want to buy or invest in gold products, you will need to find a broker, as it will not be possible to make these trades via Capital One.

 

Ally Interest Checking Account

ally bank
ally bank
On Ally Secure Website

Ally Interest Checking Account

Fees

$0

Minimum Deposit

$0

Current Promotion

None

APY Checking

0.10% – 0.25%
On Ally Secure Website

The Ally Bank interest checking accounts is a singular checking account that offers a tiered interest rate structure.  The yields vary depending on your minimum daily balance in your account.  There are no monthly maintenance fees with your checking account. 

You can access your checking account in more than 43,000 ATMs through the Allpoint network.  You can also deposit your checks remotely through your phone and computer.  This allows you to stay connected and update your finances regardless of your location.  Your checking accounts also come with free checks and debit cards, which is an added bonus. 

Some positive aspects of the Ally Bank checking account system are the ability to earn interest on your daily balance.  You do not need a minimum deposit and there are zero monthly fees.  Along with the lack of monthly fees, there are no added costs to having standard checks or debit cards.

Along with the positive benefits of having an Ally Bank checking account, there are also limited overdraft fees that are below the national average.  You must be aware of your balance because you cannot incur more than one overdraft fee in a single day.

  • Savings Accounts
  • Checking Accounts
  • CDs
  • Money Market Accounts
  • Debit Cards
  • Mortgage
  • Investing
  • What is required to open an Ally account?

There is no minimum balance to open an Ally account. All you need to do is visit the product page for the account you would like to open and click on the “Open Account” button. You’ll need to provide some personal details and financial information. Ally will send you an email after your application is approved.
Alternatively, you can apply by phone or download the application form and mail it in.

  • Does Ally checking worth it if I'm a student?

Although Ally does not have a dedicated student account, the standard checking and savings accounts are excellent. The accounts are fee free and you can earn 0.50% on your savings balance. The downside is that Ally is a fully online bank. So, there are no branches to visit if you have a problem and Ally does not offer any form of credit card. This means that while your basic banking needs are taken care of, if you need more, you may find Ally lacking.

  • Can I open an Ally checking account online?

Ally is a fully online bank, so opening a checking account online is the best way. While it is possible to open an account over the phone or by printing off the forms and mailing them in, the online application is easy and straightforward.

Does Ally offer a free checking account?
There is just one checking account option with Ally, but it is fee free. You don’t need to worry about monthly charges, account maintenance fees, or minimum deposits. You’ll even earn 0.10% on your checking account balance.

  • Can you be denied on an Ally checking account?

Ally does need to review your checking account application, and there is a risk that your application may be denied. However, according to consumer feedback, Ally seems to have quite relaxed criteria, so it is not likely that you will be denied unless there is a large red flag on your application.

  • Does Ally work for Joint Accounts?

You can add another person to most types of Ally accounts. Ally has a standardized Additional Owner form, which you need to complete. You can then upload the signed form or return it to Ally via fax or mail. You will also need to provide a signature card for each account holder.

Amex Rewards Checking

American_Express
American_Express
On Amex Secure Website

Amex Rewards Checking

Fees

$0

Minimum Deposit

$0

Current Promotion

None

APY Checking

0.60%
On Amex Secure Website

American Express Personal Savings offers an online-only bank where you can store your savings at a competitive rate without any complicated features or maintenance fees.  To use your savings account all you need to do is apply and once it is operational you can move your funds in and out through an electronic transfer. 

You can link any major United States bank account to an American Express Personal Savings account using your account or routing numbers.  There are no monthly service fees or minimum balance requirements to avoid a charge.  Because there is no debit or ATM card, there are also no ATM or overdraft fees.  The only fee you can accumulate is a five-dollar fee for a returned deposit.

The benefit of having a savings account through American Express is a simple way to open and maintain your savings account.  It is easy to navigate and organize your savings plans that offer a high-end rate that is one of the highest available from both online and offline banks.

  • Savings Accounts
  • Checking Cards
  • Credit Cards
  • Debit Cards
  • CDs
  • Personal Loans

Can anyone open a checking account with American Express Rewards?

To open an American Express Rewards Checking account, you must be an American Express® Card Member with a Consumer Card.

Prior to applying, you must be the principal cardholder and have had your card for at least three months. Amex Rewards Checking accounts can currently only be set up for individual account holders.

It takes only a few minutes to apply for an American Express Rewards Checking account.

How can I get Membership Rewards points?

One Membership Rewards point can be earned with Amex Rewards Checking for every $2 spent with an approved Debit Card. There is no cap on the number of points you can earn when redeeming them for deposits into your Amex Rewards Checking account.

How quick should I make a transfer and how to do it?

You must fund your account within 60 days after account creation in order to keep it open. You have the following choices:

  • Online Transfer: Online transfer into your Amex Rewards Checking account is possible once you've connected one of your other bank accounts.
  • Direct deposit setup: To set up direct deposit into your checking account, use the routing and account numbers provided on the home page of your Amex Rewards Checking account.
  • Mobile check deposit: By utilizing the American Express App, you can easily deposit a check from your mobile device. only accessible on iOS and Android. Rates for mobile data may apply.

Can a check be deposited into an Amex checking account?

Yes, that's possible! Use your smartphone to capture images to make mobile deposits easy with the Amex® App.

Chase Total Checking®

Chase_logo
Chase_logo
on Chase secure website

Chase Total Checking®

Fees

$12 Can be waived if you maintain a $1,000 minimum daily balance, making direct deposits or Associated SnapDeposits of $500 or more per statement cycle, or holding $2,500 in combined deposit accounts with the same statement cycle date or having a Health Savings Account or investment account

Minimum Deposit

$0

Promotion

$200 Expired on 1/25/2023

APY Checking

None
on Chase secure website

Chase Total Checking offers no minimum deposit and a bunch of options for its customers including investing options, credit cards and access to mortgage and other types of loans. In addition to a decent promotion for new customers, Chase offers a great digital experience, espeically if you carry one of Chase credit cards.

At more than 16,000 Chase ATMs around the nation and more than 4,700 branches, customers can withdraw money for nothing. According to user and customer service ratings in community reviews, Chase Bank complete checking is overall strongly advised.

  • Savings Accounts
  • Checking Accounts
  • CDs
  • Money Market Account
  • Mortgage
  • Government Mortgage
  • Credit Card
  • Debit Card
  • Personal Loans
  • Investing

Does Chase offer inflation proof banking products?

Many Chase products aren't particularly inflation proof, like the majority of banks. Chase does, however, provide fixed-rate loans for cars and homes. thus you won't have to be concerned about rising borrowing prices when you buy or refinance a home or car.

Your monthly payments will not change for the duration of the loan if you choose to lock in your rate at the beginning of the term. This is a fantastic approach to keep control of your money even if inflation picks up dramatically.

Is Chase prepared for a downturn?

On the surface, Chase has a strong financial reports, expreineced management and great reputation. However, during recessions we are aware of extreme conditions so it's difficult to know which banks are more exposed to potential crisis. 

Chase has a long history and a strong financial foundation. The bank has paid back the federal bailout money it received in 2008 and is also FDIC insured. This shows that despite experiencing the biggest financial crisis in recent memory, the bank was able to recover. 

Is there a free checking account offered by Chase?

All Chase checking accounts—with the exception of those for children and students—have some sort of monthly maintenance fee. However, if you satisfy one of a number of account requirements, you might be eligible to have this cost eliminated. For instance, the $12 fee for Chase Total Checking is removed if you keep your account balance at $1,500 or receive at least $500 in direct deposits.

Can I purchase or invest in gold products through Chase?

Chase offers access to investment alternatives from its sibling companies as a member of the JP Morgan group. In order to trade stocks, ETFs, and options, you can either work with an advisor or go it alone. This implies that you can buy gold equities on this site.

Additionally, new users can take advantage of limitless commission-free online trades with certain products for zero dollars. However, Chase has a highly open pricing structure, allowing you to choose your investment strategy with confidence.

If I have bad credit, is Chase still worthwhile?

Chase does not specifically offer goods for those with bad credit, but it can be a decent option if you want to improve your credit score. The bank offers a straightforward checking account with few extras so you can focus on developing sound financial practices.

The bank additionally provides customers with the Slate Edge credit card, which includes an automatic review to raise your credit limit if you make on-time payments and spend $500 or more in the first six months. Your rate could potentially decrease by 2% annually.

Therefore, even if your existing credit score initially qualifies you for a high rate, you can lower your rate and improve your credit score with responsible card use.

Checking Account Reviews

Bank Account Basics

What is a Checking Account?

A checking account is a type of deposit account that allows both deposits and withdrawals. Checking accounts are quite flexible, as you can access your funds via check, electronic debit or automatic teller machines, among other methods.

While a savings account may have a limit for withdrawals and deposits, checking accounts typically allow unlimited deposits and numerous withdrawals.

Most financial institutions offer different types of checking accounts. Commercial checking accounts are used by businesses with officers and managers of the business granted signing authority on the account.

Student checking accounts are typically free or have perks for the account holder until graduation. Joint checking accounts allow two or more people, typically marital partners to both sign on the account.

In exchange for this liquidity, most checking accounts do not offer high interest, some don’t offer interest at all. However, when held with a chartered banking institution, the FDIC guarantees funds of up to $250,000 per depositor.

Some banks also offer “sweep” checking accounts. This is ideal for those who carry large balances, as the excess funds in the account are withdrcawn and invested overnight into interest bearing funds. At the start of the next business day, the funds are returned to the checking account, together with any interest earned overnight.

Modern Checking Accounts Provide Better Experience

While they may have started out as an account that allows you to write checks, modern checking accounts offer much more than this. The ultimate purpose of checking accounts is to provide a place to securely hold your money in the short term. This makes it available when you need to cover expenses or pay bills.

Today, checking accounts include debit cards that allow you to swipe to make a direct purchase, make online purchases or withdraw cash at the ATM. However, some banks do still provide a free set of checks, but since the use of personal checks is on the decline, this option is not always available.

Checking accounts aim to help you simplify your day to day finances. You can automate payments and deposits. You can arrange for your employer to direct deposit your paycheck into the account, and you can use online billing to ensure you pay all your expenses on time.

Like a savings account, each checking account has a unique account number. You can provide this to your employer for direct deposit of your salary, and you can also give this number along with your authority for utility companies and other providers to take the funds for your bills from your account without any need for you to intervene.

If you are eligible, you may also qualify for an overdraft facility. This will allow you to borrow funds for purchases and expenses for a fee.

Checking Account Pros and Cons

Like any financial product, there are both positives and negatives associated with checking accounts. It is important to be aware of these before you make a decision about any product.

First of all, your money is very safe in an FDIC insured account- which all legitimate banks are a part of. They will protect your account up to $250,000, so you will not need to worry about your money there.

With your checking account, you will have a record of deposits and your spending. This can be a great help for budgeting, as you can see where your money is going. Some checking accounts also allow you to set limits on your debit card to more easily manage your money.

With a debit card, ATM, online transfers and direct debits, there are multiple ways to access your funds from your account.

From “no fees” account, overdraft protection and promotions, many checking accounts offer great perks. 

Any funds you have in your checking account will earn little to no interest. This can be a little frustrating if there is a period between your paycheck arriving in your account and your expenses being withdrawn.

 Some accounts require that you receive a minimum amount into the account each month, or you may need to keep a minimum balance.

You will also need to consider that your checking account may attract fees. The most common are overdraft fees, monthly maintenance fees and ATM fees.

What Else Should You Consider?

Once you have narrowed down your options, you need to consider what fees apply. Many banks charge a monthly service fee, which is taken from your account each month. Some banks waive the fees if you maintain a minimum balance. However, online banks typically don’t charge a service fee.

There are also other types of fees that may apply. These include overdraft fees and out of network ATM fees. If you travel a lot, you should also check what foreign transaction fees are imposed if you use your debit card abroad.

How Much Money Should I Keep in My Checking Account?

Since checking accounts don’t typically pay much interest, but you may need to keep a minimum balance in the account, how much money you should keep in your checking account can be tricky.

Generally speaking, you should aim to keep one to two months of your living expenses in your checking account, with a 30% buffer for unexpected expenses.

It is a good idea to keep a spending log for two or three months to track how much you typically spend in a month. Don’t forget to include payments automatically deducted from your account and your card purchases. Once you have an idea of how much you spend in an average month, you can ensure that you keep sufficient funds in your account and avoid any costly overdraft fees.

Just remember to also consider if your account has a minimum balance and factor this into your calculations.

Savings are a crucial part of financial stability. Whether you have an emergency fund or investment funds, savings can provide security against unforeseen events or situations. As you can see in this chart using FED Survey of Consumer Finances data, Americans are saving more. 

 

Is My Money Safe in an Online Checking Account?

Online banks are generally safe, but you do need to check that your online checking account is insured by the FDIC. This will ensure that your checking account has the same protections that would be enjoyed by holders of a traditional bricks and mortar checking account.

FDIC insurance provides coverage for up to $250,000. You can use the FDIC BankFind tool to ensure that specific banks are insured. You can do this by searching by bank name or website address.

In addition to FDIC protection, there are some safety precautions when banking online. You should:

  • Never use a link received via email or txt. Always type the website address into your browser.
  • Change your password regularly and ensure it isn’t used elsewhere.
  • Set text message alerts to check for unauthorized transactions on the account.
  • Use multi factor authentication. A two step process adds a little work, but it does add another layer of security.

Best Uses For a Checking Account

A checking account is not the solution for all financial goals, however, there are some best uses for such an account including:

  • Keep Cash Reserves Safe: While it may still be possible to cash your paycheck and pay all your bills in cash, keeping lots of money at home or on your person is a risk. Keeping your money in a checking account allows you easy access to your funds, while keeping them secure. Additionally, some companies will offer an incentive, such as a discount if you opt to pay them through ACH debit.
  • Enjoying More Payment Options: A checking account provides greater flexibility to access your funds. You can initiate digital transfers, use a debit card, withdraw cash at an ATM and more.
  • Eliminate Check Cashing Fees: Most employers don’t pay by cash, they pay via direct deposit or check. So, if you don’t have a checking account, you’re likely to need to pay a fee to cash your paycheck.
  • Easier Bill Payment: Modern checking accounts often have intuitive online features including a bill payment dashboard. This allows you to pay your bills directly out of your account, or you can set up automatic bill pay for even easier payment.
  • Tracking Your Finances: If you’re trying to manage your money, it is important to understand how you spend it. A checking account provides a statement of when your money comes in and out of your account, making it easier to track your finances.
  • Access Member Benefits: Many banks offer checking account customers specific benefits or perks. For example, you may access insurance offers or retail discounts by opening up a checking account.

How Do ATM Networks Like MoneyPass and Allpoint Work?

Companies like MoneyPass and Allpoint operate a network of ATM machines. Businesses and locations such as grocery stores and gas stations essentially rent an ATM on the network, and receive a share of the fees charged by those using it to withdraw cash. MoneyPass or Allpoint maintain the machine, performing repairs and filling it with cash, while the business provides an accessible location, where customers can use the machine.

From a consumer point of view, the ATM networks partner with banks and financial institutions, allowing you access to the ATMs with no fees. The choice of network will depend on the bank that you choose.

If your bank participates with a network, you will find that when you use your card to withdraw cash or perform another transaction, there is no surcharge. However, you need to be careful, as if your bank is not connected to a specific network, there will be a fee for each transaction.

You also need to check whether there are other fees associated with the network. For example, Allpoint machines are available in different areas of the world, but you may incur a foreign transaction fee if you use a machine outside the US.

Can I Make Payments From a Checking Account?

We’ve touched on this, but it is worth reiterating. One of the benefits of a checking account is that it offers flexibility in the ways you can access your funds. With a checking account and its associated debit card, you can withdraw cash and make payments in a number of different ways. These include:

  • Swiping Your Card: If you’re in a store, you can pay for your purchases by swiping your debit card and the funds will be taken out of your checking account.
  • Making an Online Payment: You can also use your card details online if you make a purchase. However, there may be a verification process where you need to confirm the transaction with an SMS code.
  • ACH Debits: You can also make payments for your regular bills by setting up an automated debit.
  • Initiating Transfers: Finally, you can make payments to businesses, individuals or even to your other bank accounts by initiating a transfer. You can usually do this online, by speaking to the customer support team or by speaking to a teller.

Checking Account: Should I Be Concerned About Inflation?

Inflation is a concern when considering your long term finances. If the rate of inflation is 2% and your savings account pays 1.5%, in the long term, you’ll be losing some of the buying power of your money.

This means that you need to seriously consider how the rate of interest compares to inflation, if you’re planning on leaving your money in an account.

However, a checking account is designed for short term, day to day transactions. Since most checking accounts pay little to no interest, it is not the right account to leave large sums. The best way to use a checking account is to have sufficient funds, along with a contingency to cover all your typical monthly expenses.

If your checking account requires a monthly balance, you will need to look at what benefits it offers to offset tying up your funds and potentially having an issue with inflation. Most accounts that require a minimum balance offer some great benefits, which more than compensate for having an interest rate below the rate of inflation.

Online Bank or Credit Union?

Another area worthy of consideration is whether you should open up a checking account with an online bank or credit union. These days, there is far more choice than relying on your high street bank for checking facilities. Credit unions and online banks have created far more competition in the marketplace, allowing consumers to reap some interesting benefits.

In terms of convenience, online banks and credit unions have few differences, particularly if your local credit union offers good online services and access to a nationwide ATM network. Both types of institutions offer equal safety in terms of federal government backed insurance.

The main differences are that credit unions tend to offer lower fees and better interest for savings accounts and borrowing services. However, online banks tend to have more advanced technology, so you can access your account via app or online with more functionality.

Another potential difference is that large online banks tend to have less flexibility in regards to decision making, and you may experience better customer service with a credit union. However, credit unions tend to operate independently, so they may not all offer the same products and services.

So, it may be worthwhile checking what is on offer at your local credit union and comparing it with the latest online bank offerings.

How Minimize Checking Account Fees?

The fees associated with checking accounts can vary depending on the financial institution and specific account terms. Typically, you will need to consider monthly maintenance fees, overdraft fees, and ATM surcharges.

Fortunately, there are some ways to avoid or minimize the charges on your checking account.

Many of the major banks will waive monthly maintenance fees if you keep a minimum balance in the account. This may take the form of an average daily balance or the balance on the last billing cycle day.

Another effective way to avoid checking account fees is to have your paycheck or other forms of income automatically deposited into your account via direct deposit. This is a great option if you would struggle to maintain the minimum balance. However, you need to be aware that many banks require a minimum direct deposit amount to qualify.Discounts

Some groups such as seniors citizens, students or veterans can qualify for discounted or waived service fees.

You may also be able to avoid paying checking account fees by opening up other accounts with the same bank. Some banks will waive the fee if you open a savings account. This can also help you to more efficiently manage your money, as you can quickly and easily transfer surplus cash into an interest bearing account.

Finally, look for banks or financial institutions that offer a free checking account. These are often loss leaders for the financial institution and you may be encouraged to open a savings account, loan or credit card account.

Typically, fee free accounts are offered by online banks and credit unions, but traditional bricks and mortar banks may offer similar products to compete.

Checking Vs Savings Account

Checking accounts don’t usually have restrictions about the number of transactions that you can do each month, while a savings account would have a limit to the number of withdrawals you can make in person or from an ATM.  There could also be a limit on the number of transfers you can make from savings to checking accounts.

Generally, you can’t make direct payments from your savings account because of a federal law that limits some withdrawals.  Experts call this provision of the law Regulation D.

It’s definitely easy to use the money in your checking account via an ATM withdrawal, writing a check, using your debit card, or paying electronically.  So, if what you need is an account to disburse funds, a checking account is most appropriate.

Where Can You Open a Checking Account?

You will find that checking accounts are still a staple product of banks.  If you need wide accessibility, you should go to the big banks like Chase, Citi, and Bank of America.  These banks have the necessary facilities such that you can open your checking account in person or online.  On the other hand, there are banks like Ally and Charles Schwab that have few or zero physical branches – you’ll have to access their website to open an account.

If you’re planning to open an account in a credit union, it may not be as easy as signing on with a bank.

  Although some of the larger credit unions will let you join them if you donate to a designated association, the majority of credit unions limit their membership by region or trade.  You need to investigate the options available for you depending on where you live or what you do professionally.

How to Open a Checking Account

The first step in opening an account – whether in a traditional branch or an online bank – is to fill out an application form.  When opening in person, just tell the bank representative that you want to open a checking account.  For an online account, simply click the “Apply Now” or “Open an Account” button on the bank’s website.  The application form will help the bank evaluate whether it can allow you to open an account or not.

When you apply for a checking account, the bank will ask you to provide a government-issued ID such as your driver’s license or passport, plus your Social Security Number.  You should be ready to show proof of residence, like a bill from the utility company or your lease contract.

Expect the bank to run a credit check on you because they would want to get an idea of your banking history.  For example, if they see that you’ve failed to pay maintenance fees on former bank accounts, they may decline your application for an account.

If they approve your application, they would likely ask you to make an initial deposit although that would depend on the bank.  Not all banks will do this and if they do, you will notice that the initial amount will differ from bank to bank.  The point is to know how much the bank will ask so you can be ready with the amount before you open your account.  You can bring the corresponding cash or at least be prepared to transfer funds from your other account.

In most cases, when you personally open an account, the bank will give you a temporary debit card and ask you to nominate a secure PIN.

They will send your permanent debit card and account paperwork through the mail to your reported address within a few days after opening. If you open an account online, you won’t have your debit card immediately – the bank will send it through the mail to your address.

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Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor, which helps consumers make better financial decisions.  Silvermann's areas of expertise include investing, banking, and credit cards. Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more. Aside from being a finance expert, his background includes working as a business and financial analyst. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.
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