In 2021, Americans spent roughly $305 billion in interest and fees related to financial products like bank accounts, according to the Financial Health Network’s FinHealth Spend Report 2022. While this dropped from the $319 billion spent in 2020, Americans still pay a hefty price to use financial products. However, whether you’ve been burned in the past or are new to banking, you can avoid or minimize bank fees through bank accounts that don’t charge customers. Such banks do not charge monthly maintenance fees, do not have minimum balance requirements and have low initial deposits. Here’s where to look for bank accounts with minimal fees and how to tell which suits you best.
For more help with banking and financial planning, consider working with a financial advisor.
Common Bank Fees
You may think of banking as a way to earn interest and securely store your money simultaneously. While that is true for many customers, some banks will ding your account with fees for various infractions. Usually, they are avoidable if you understand the conditions ahead of time. These are some typical fees to look out for:
Monthly Maintenance Fee
Many banks offer accounts that incur charges if you don’t meet specific requirements. For example, a checking account may stipulate a monthly minimum balance to prevent fees. Plus, some banks require you to route a direct deposit or use your debit card at least once per month to avoid fees. Otherwise, you could face monthly charges of as much as $25.
Although many banks boast expansive ATM networks, you might only be able to access an out-of-network ATM in a pinch. As a result, you might pay between $1 and $5 for withdrawing money from the wrong ATM.
Additionally, banks often provide ATM fee reimbursements that only cover your first few withdrawals. If you make too many monthly withdrawals, you’ll be on the hook for an average of almost $5 per transaction.
Excessive Withdrawal Fees
Before COVID-19, federal law prohibited bank customers from performing more than six monthly transactions with their savings accounts. This regulation is currently suspended with no set date to restart. However, if excessive withdrawals become limited again, you might pay up to $25 for excess transactions. That said, it’s a good idea to use your checking account for transactions and leave your savings account balance to accrue interest.
If you’ve ever tried to make a purchase with insufficient funds in your bank account, you know overdraft fees sting – and you might not be able to complete your purchase. Fortunately, many banks offer overdraft protection. It’s less expensive than conventional overdraft fees and allows you to make purchases by accessing money in your savings account or other connected account. Some banks even offer free overdraft protection.
Insufficient Fund Fees
If you don’t have overdraft protection or have a check bounce, fees can be as large as $35 for an incomplete transaction. Like overdraft fees, you can prevent insufficient fund fees by maintaining a healthy balance in your checking account. You can even subscribe to email or text messages that notify you of a low balance.
Wire Transfer Fee
Wire transfers can help you send funds rapidly or in sizable amounts and are handy for international financial transactions. However, they cost specific fees, unlike moving funds on your bank’s website or app. A domestic wire transfer generally costs a maximum of $35, while international wire transfers can cost up to $50.
Early Account Closing Fee
You might open a bank account and soon after find a better deal elsewhere. Unfortunately, switching bank accounts isn’t always easy. Your bank might have a condition for you to keep your account for a specified period, often three to six months, before you can close it without a fee. Shuttering the bank account before the time limit may cost you $25.
Banks That Don’t Charge Fees
While you can circumvent some bank fees, all the hoop-jumping can get irritating. Luckily, several banks offer no-fee checking accounts you can use without stress.
Capital One 360 Checking
Capital One offers a checking account with an excellent mobile app user experience and no opening minimum deposit requirement. The bank boasts hundreds of branch locations and an ATM network of over 70,000 locations. In addition, you’ll earn 0.10% APY on your account balance and never experience overdraft fees. However, the account doesn’t provide reimbursement for out-of-network ATM fees.
Other infrequent bank functions, such as stop payment and outgoing wire transfers, incur fees as well. Lastly, customers will pay $7 for a fifty-quantity checkbook and $11 for 100 checks, with the first fifty checks for the account being free.
Ally Spending Account
Ally Bank has no physical locations and relies on a top-notch digital customer experience to acquire business. Its Spending Account has no monthly fee or minimum balance stipulation. You can open the account with any amount of money and earn 0.10% APY on balances below $15,000 and 0.25% on balances over $15,000.
The account provides a free ATM network with over 43,000 terminals and $10 in monthly reimbursement for out-of-network ATM withdrawals. Plus, it has free overdraft coverage. That said, Ally’s main drawback is its lack of physical locations, which can pose a problem if you prefer banking in person. Also, it charges $20 for outgoing domestic wires and $7.50 for bounced checks.
Discover Cashback Debit Account
Another online-only financial institution, Discover, offers a no-fee checking account with 1.00% cash back on $3,000 of debit card purchases monthly. If you max out this reward every month, you’ll earn $360 annually (for comparison, you’d have to maintain a balance of at least $36,000 with Capital One’s account or $15,001 with Ally to match this rate). Additionally, its customers have access to over 60,000 free ATMs and free overdraft protection. According to its website, the only fee this account charges is $30 for outgoing wire transfers.
Alliant Credit Union High-Rate Checking Account
Alliant’s checking account features 0.25% APY plus a 0.25% dividend payment for customers who opt into paperless statements and implement a monthly electronic deposit. It also has over 80,000 in-network ATMs and $20 of monthly reimbursement for out-of-network ATM fees. The account charges fees for conventional services, such as stop payment, foreign transactions and paper checks. However, it has no monthly minimums, no overdraft fees and no maintenance fees.
Chase College Checking Account
Students may want to check out Chase’s account, which charges no monthly maintenance fee for customers ages 17 to 24 who show proof of student status. The account has no minimum opening deposit but charges fees if you do not set up a regular electronic deposit to the account or if the average ending daily balance falls beneath $5,000. Plus, Chase is currently offering a $100 bonus for opening a student account. Chase provides a free ATM network of 16,000 locations. However, it provides no ATM reimbursements, zero interest and has a $34 overdraft fee.
Bank of America Advantage Banking
Bank of America offers three accounts with potentially no monthly fees. Its SafeBalance Banking® account charges no monthly fee for students under age 25 and all account holders under 18. Next, its Advantage Plus account waives the monthly fee if you have a qualifying direct deposit of at least $250 or maintain a $1,500 minimum daily balance. Lastly, its Advantage Relationship account removes monthly fees if you maintain a combined balance of $10,000 in qualifying connected accounts. All three accounts offer free overdraft protection.
Citibank Basic Banking
Citibank’s Basic Banking account removes its monthly service fee for customers who make a qualifying direct deposit and bill payment per month or maintain a combined average monthly balance of $1,500. It provides free usage of thousands of ATMs but does not provide out-of-network reimbursement. The account does not apply the monthly fee to customers under age 18 or over 62. However, its website cautions that all customers will experience certain fees outside of the monthly maintenance charge.
CIBC US iCan Checking Account
Customers in Illinois, Michigan, Missouri and Wisconsin have access to CIBC Bank’s account that charges no monthly fees. You need $50 to open the account and will not earn interest. Instead, the account returns 1% cash back on up to $2,000 of debit card purchases per month. Your first round of checks is free, and you can receive $50 per month of ATM fee reimbursements.
Chime Checking Account
Chime is a banking platform rather than a bank or credit union. As a result, it is an online-only financial institution and uses other banks’ resources to serve you. The payoff is a host of advantages:
How to Choose a Fee-Free Bank
Many banks offer fee-free accounts, but your choice of bank will account for additional factors based on your circumstances. Keep these tips in mind when shopping for a zero-fee bank account:
Assess the Bank’s Auxiliary Services
Most banks provide more than just checking and savings accounts. For example, you might be interested in opening an investment account, getting a mortgage or speaking with a financial advisor. Therefore, it’s wise to ask the bank if they provide services matching your preferences before committing to an account.
Calculate Interest Payments
Many banks offer interest or cash back for checking account holders. Take stock of your average monthly balance and spending habits to see what APY or rewards system will give you the most bang for your buck.
Consider the Fees
While this article outlines accounts with zero or minimal fees, most banks charge for services like wire transfers and bounced checks. If you’re concerned about a particular fee or have run into specific financial challenges in the past, some banks’ fee structures might be more punitive for you than others.
Physical Versus Digital Banking
Mobile and online banking are more convenient and accessible than ever. Virtually every bank account allows you to deposit checks on the go and apply for loans and credit cards online. However, steer clear of online-only banks if you want to bank at a brick-and-mortar location.
You can hold a checking account with a bank, credit union or banking platform. Banking platforms may be unfamiliar, but they are online companies that work with traditional banks and often provide better interest rates and additional financial tools.
This tip is adjacent to your banking preferences – essentially, just ask yourself how you withdraw your money. You might get by on cash withdrawals from ATMs or grocery store purchases. You might go entirely cashless. Or, you usually travel to your local bank branch for services. No matter your preferences, the last thing you want is frustration when trying to access your money.
Yes, everything, especially the fine print! Check for FDIC insurance and the fees the account can incur. Ask the bank if you need clarity on any point.
The Bottom Line
It doesn’t take a mountain of cash to open an account with a high interest rate and low fees. Various online and physical institutions offer accessible bank accounts that don’t charge monthly fees with minimal effort on your part. So whether you’re in college, at the height of your career or retired, there’s a fee-free bank account to suit you.
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