Best Checking Accounts

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Safety, simplicity, and convenience: all primary motives for opening a bank account, right? Though banks and credit unions now offer several kinds of accounts, savings and checking accounts are still tried-and-true staples.  

What’s a checking account?

A checking account allows numerous deposits and withdrawals as well as easy access to money. You can access funds in your checking account by writing a check, using a debit card, setting up an automatic transfer or withdrawing cash at ATMs.

Banks often offer different options or packages, and it’s important to know what monthly service charges or fees are before diving into a particular checking account.

Different types of checking accounts

To help you zero in on the right kind of checking account for you, here are some options:

Basic/plain vanilla checking account: If you use your checking account to pay bills or some daily expenses and use a debit card, a basic/plain vanilla checking account could be for you. The pitfall is that you might have to maintain a minimum balance to avoid being charged. There are also restrictions on the number of checks you can write.

Free checking account: It’s definitely worth checking out free checking accounts with no minimum balance, and your bank and credit card could offer them. That way, you still get a checking account and don’t have to add in ridiculous fees.  

Joint checking account: This account is owned by more than one person, who usually reside together or share expenses.

Student checking account: Most banks give out special offers if the checking account is a student account. The offers or freebies include free checks, free ATM use, better rates on loans and credit cards and discounts on travel and purchases, etc.

Money market checking account: An interest-bearing account that offers higher interest rates than a savings account, money market accounts also have check-writing limits. A higher return is possible with a money market account, as they invest in CDs, government securities and commercial paper with higher yields. The downside is that the minimum balance requirement is high.

Pros and cons

Pros:

  • Allows transactions without the tedium of having to carry cash.
  • Facilitates online money transfer or payment of bills without having to write out a check.
  • Provides the convenience of using a debit card or operating through ATMs.
  • Funds in a checking account are insured up to a certain limit by the Federal Deposit Insurance Corporation, or FDIC. The standard insurance amount is $250,000 per depositor per insured bank.

Cons:

  • A checking account is usually associated with a host of fees, including monthly fees, ATM withdrawal fees, over-the-phone transaction fees, overdraft fees, etc. A fee is charged if you go over the minimum balance..
  • Identity theft and fraud can be a concern; you’ll want to make sure the bank is FDIC-insured.
  • Poor handling of a checking account will impair your credit rating. Bounced checks, late or missed bill payments, etc. can land you in credit trouble.

Things to consider

When evaluating a checking account, it’s a good idea to evaluate accounts you’re considering side-by-side with the following:

  • Minimum balance
  • Monthly maintenance fees
  • Other fees/charges (foreign transaction fees, stop payment fees, ATM fees, debit card fees, overdraft fees, etc.)
  • Number of ATMs
  • Number of branches
  • Annual Percentage Yield, or APY, which is the effective rate of return or interest rate on a banking account over a one-year period, considering the compounding effect of interest.
  • Other services such as free transfer and bill payment
  • Online banking
  • Mobile app
  • Customer support
  • Sign-up bonuses

Best overall

Capital One 360 checking account, which is an online account but also allows physical banking access, seems to trump others on a few counts. It is a fee-free online checking account that requires no minimum opening balance but would still earn us interest.

The company offers fee-free ATM services at its over 39,000 Capital One and Allpoint ATMs. APYs for a balance of over $100,000 is one percent, while a $50,000 to $99,999.99 balance fetches you an APY of 0.75%. Anything less than $50,000 gets you an APY of 0.20%.

A mobile app is available for money transfer and check deposit, where you can upload check photos for deposit. The company assures that there are no hidden charges, although overdrafting on credit, overnight delivery of a check or a replacement card, stop payments and rejected check can all incur charges.  

Best for minimum balance and fees

Several banks offer checking accounts with $0 monthly fee, which are usually termed as free checking account. Aspiration Summit checking account, Simple fee-free checking account, Chime Spending account, Discover Cashback checking account, Bank of Internet Rewards checking account, Capital One 360 checking account and Ally Interest checking account all claim to charge $0 in monthly fees. Meanwhile, Citibank Simple Checking account charges a $12 monthly service fee.

These checking accounts do not require a minimum account opening balance:

Other with a minimum opening balance include:

Best for yield

Northpointe Bank offers checking account with an APY as high as 5%, although the return comes with a lot of riders such as the mandatory 15 or more debit transactions, subscription to e-statements and a $100 direct deposit per statement.

One American Bank’s Kasasa Cash offers 3.50% APY, with the 3.50% rate applicable if you meet certain conditions such as a minimum of 12 debit card transactions per month, sign up to receive e-statements and log in to online banking at least once in a payment cycle. If these conditions are not met, a base APY rate of 0.01% is applicable.

Redneck Bank’s Rewards checking account has an APY of 2%, contingent on doing 10 debit card transactions per month and subscribing to e-statement. If even one of these conditions are not met, you’ll only earn an APY of 0.50%. Among credit unions, First Financial Credit Union and La Capitol Federal Credit Union offer checking accounts with APYs of 5% and 4.25%, respectively.

Consumers Credit Union’s high-yielding checking account offers APY of 4.59% for balances up to $20,000, contingent on meeting certain requirements.

Best for sign-up bonuses

HSBC offers a  $200, $350 or $500 sign-up bonus, and you’ll get $200 paid when you open a Choice checking account and deposit $1,500.

If you open  an HSBC Advance checking account and deposit $10,000, you’ll get a bonus of $350, while customers opening a HSBC Premier checking account and deposit $10,000 get $750. Other banks pay out bonuses of $200 or more on a checking account.

These include Chase Bank, Citibank, SunTrust Bank, Fifth Third Bank, Wells Fargo Bank, BMO Harris Bank and Regions Bank.

Best for students

Citibank Student checking account, U.S. Bank Student checking account, BB&T Student Banking account and Capital One 360 checking account charge $0 in fees, with an applicable waiver as long as the account holder is in school or until graduation.

Best for overseas travelers

For those seeking the best international ATM use facility, Schwab Bank’s checking account may be the right one for you. It allows unlimited ATM fee rebates worldwide, which is applicable to cash withdrawals using a Visa debit card, wherever accepted. It claims to charge zero service fees and have no account minimum. However, the only pushback is the 0.15% APY on the account balance, which is fairly low, compared to normal online checking account standards.  

For online and traditional banking operations, international travelers can utilize the Capital One 360 checking account. However, in terms of physical international branches, Citibank, with its vast global network, may come in handy.

Final thoughts

Checking accounts are now a personal finance management tool, allowing payment of bills without having to write out checks and seamless transfer of money online, among other things.

Financial institutions, in a bid to reel in more customers, flaunt their best features, making online banking safe, without overtly conveying the unpalatable things associated with their products. Ultimately, it’s in your best interest to carefully assess your options.