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Best banks for free checking: comparing fees

It seems like every bank in the U.S. advertises a “no fee” checking account. But if all banks offer this account, then why do so many people encounter annoying fees every single month? researched some of the most popular 25 banks in the country and compared their checking account fees to create a checking account fees comparison chart for your convenience.

It seems like every bank in the U.S. advertises a "no fee" checking account. But if all banks offer this account, then why do so many people encounter annoying fees every single month? researched some of the most popular 25 banks in the country — including the banks mentioned in our 10 Best Checking Accounts of 2015 and 10 Best Online Checking Accounts of 2015 lists — and compared their checking account fees to create a checking account fees comparison chart for your convenience.

How to Compare Checking Account Fees

There are numerous checking account fees to consider when looking for a new checking account. The four most important factors to consider before choosing a checking account include:

  1. ATM Fees: Fees that banks and financial institutions charge for the use of their automated teller machines (ATMs).

  2. Monthly Maintenance Fees: The monthly cost to maintain a checking account at a bank or financial institution.

  3. Overdraft Fees: Fees charged when a withdrawal from an individual's bank account exceeds the available balance.

  4. Minimum Deposit Requirements: The minimum amount of money required to open an account.

Everyone has different banking needs, so it's important to compare checking account fees thoroughly. For example, if you're someone who frequently uses the ATM, a checking account that does not rack up an obscene amount of ATM fees is important. Or, if you tend to overdraft, you'll want to look for a checking account that charges the least amount in overdraft fees.

Checking Account Comparison: Best Banks for Fewer Fees

Many banks with the lowest fees are online banks, and that's simply because they are cheaper to operate. Online banks usually have no overhead costs so it's easier for them to pass on savings to clients.

Some online checking accounts, such as Simple Checking and FNBO Direct Online Checking, do not charge ATM fees for out-of-network ATM usage. And some online banks, like Ally Bank, usually go a step further and reimburse the client if they are charged for using another bank's ATM. Monthly fees also tend to be rare among online banks.

The best route to get a checking account with fewer or no fees might be to go with an online bank. But if you prefer a no monthly fee checking account from a brick-and-mortar bank, try to negotiate with them. If that doesn't work, prepare to meet the requirement for monthly fees to be waived, such as keeping a minimum balance. Banks like Chase, Bank of America and Wells Fargo offer to waive the monthly service fee if you meet certain conditions.

Related: What Banks Have Free Checking With No Minimum Balance?

Checking Account Comparison: Worst Banks for Fees

A large percentage of the banks with the worst fees are brick-and-mortar banks, most likely because they are more expensive to operate.

For example, Wells Fargo charges $2.50 per transaction for an ATM outside its network (plus you might have to pay the ATM's owner's surcharges) with its Everyday Checking account. The overdraft fee is $35, and the monthly fee is $10. Ally Bank, on the other hand, doesn't charge for ATM usage for non-network ATMs or a monthly fee. Its overdraft fee is $25, but the bank does reimburse up to $10 per statement cycle for fees charged at other domestic ATMs. Overall, the account at Wells Fargo costs more to maintain.

However, there are benefits to maintaining an account at a brick-and-mortar bank, including: larger selection of checking accounts, keeping all of your assets and accounts in one place, and one-on-one interaction with a bank representative. The last point might sound silly to millennials, but for other generations, interacting with an individual at a bank is an integral part of their relationship with a financial institution.

Is There Such Thing as a Free Checking Account?

Yes, you can find a no-fee checking account, such as Capital One 360 Checking and Simple Checking. Some checking accounts, like MyCBB Free Checking, offer many free services, but you might have to make an initial minimum deposit or maintain a minimum balance.

But it's important to understand this: Banks fees across the country are not particularly low. According to Robert Johnson, president and CEO of The American College, which offers education in financial planning, retirement coaching and more, there are two reasons for this.

"Banks need to create revenue sources to make up for foregone revenue as a result of the sweeping Dodd-Frank Wall Street Reform and Consumer Protection Act that was passed in response to the financial crisis of 2008," he said. "Plus, given the low-interest rate environment, it is not as profitable for banks to invest checking account money."

Before the financial crisis, it was easier to find cheaper checking accounts and checking accounts that offered rewards. Today, an easy target for banks to make revenue is through monthly maintenance fees and higher out-of-network ATM fees.

"We will only see the return of free checking and high-interest checking when the economy improves and interest rates return to historically more normal levels," said Johnson.

Read: Fraud Alert: What Are You Doing to Keep Scammers Out of Your Checking Account?

How to Find a Free Checking Account

If you are determined to find a checking account with low or no fees, here are the steps you should take to find one:

  1. Figure out what your needs are. Go through your banking statements and ask yourself: Do I need a lot of free ATM transactions? If so, how many? Is a low overdraft fee important? Do I do my banking online or in a physical bank?

  2. Compare checking account offers. Next, go through the checking account comparison chart and see which banks have free checking or at least low or zero fees that matter the most to you.

  3. Stick to the rules. If your bank charges for using other banks' ATMs, then don't use them. Abide by the rules of the checking account so that you're not charged any fees.

Other Factors to Consider When Choosing a Checking Account

Fees are important, but this is not the only factor to consider. Other things you want to look for in a checking account include:

  1. High Yield: According to the Federal Deposit Insurance Corporation (FDIC), that national rate on interest checking is only 0.04 percent as of Aug. 17. Generally speaking, credit unions and online banks tend to offer higher rates. Aim for a high yield to accumulate extra cash in your checking account.

  2. Promotions: For example, Chase Bank is offering a $150 bonus for opening a Chase Total Checking Account. All you need is $25 to open the account.

  3. Checking Account Rewards: A bank might charge you fees, but it also might pay you back in bank rewards and cash back. For example, KeyBank's Relationship Rewards lets you earn points through checking account and debit card usage. Points are easy to accumulate, and they can be exchanged for things like cash back, travel and merchandise.

  4. "X-Factor": Look for a competitive edge that suits your needs. For example, PNC Bank's Virtual Wallet is an online money management tool that features a money bar, which illustrates where you need to save and where you need to spend. It's colorful, interactive and easy to manage money directly from your bank account.

Keep reading: 10 Free Business Checking Accounts

Checking Account Fees to Watch Out For

Less than a third of all bank accounts come attached with no fees at all, while expenses are rising on accounts that do. The median overdraft fee, for example, has crept to $34 per transaction, or roughly a 17,000% APR for taking out 20 bucks at the ATM, according to the Consumer Financial Protection Bureau.

Americans really care about fees, but are hapless at skirting them. A February 2014 GOBankingRates poll found fees are the No. 1 factor that sway consumers' banking decisions, with 45 percent of respondents saying they decide where to bank based on fee structures — more than rates, customer service and accessibility combined. Yet in 2013, banks earned $31.8 billion in overdraft fees alone.

That could be because customers don't realize how much they're giving up in fees. Of the 30 percent of Americans whofrequently overdraw, half do it because they don't know their account balances. A sixth say they overdraw because their banks' overdraft policies are too confusing.

Overdrafts are just the tip of the iceberg, too. The average checking account comes with about 30 fees, according to WalletHub, and not all of them are as easy to predict as overdraft or monthly service charges. Here are some of the sneakier fees that come attached to your standard bank account — and how you can make sure they don't deplete your savings.

1. Reordered Overdraft Fees

According to a 2014 survey from Pew Charitable Trusts, almost half of all major banks "reorder" checking account transactions so that they post by size, not the order in which they were made. For bank customers who are susceptible to overdrawing their accounts, this switch could cause one overdraft charge to balloon into three or four.

Banks that employ this practice (almost all of the major ones except for Citibank) say they do this so that larger and more important expenses like mortgage payments clear first. The actual result is that consumers overdraw their accounts sooner and more often, with each subsequent overdraft racking up another 30-something dollars.

If you overdraw your account because of posting order, your best bet is probably to appeal the charge to the bank — although appealing any kind of bank fees can be tough, said Warren Taylor, president of BankMobile. "If one carries high balances, some banks will negotiate the fees with you — but most banks require their branches to keep 92 to 98 percent of fees charged," he said. "If you don't have a lot of money, you are in trouble. You can appeal to the regulator of the bank or the CFPB to intercede on your behalf if you feel the fees are abusive."

Learn More: Everything You Need to Know About Overdraft Protection

2. $5 Charge to Not Overdraft

This is a service Bank of America rolled out this year with its SafeBalance account, a product that promises account holders won't have to pay overdraft charges — just a $4.95 monthly fee. Any time you try to spend more than the balance in your account, your transaction is declined.

Of course, this is an option that's technically available to anyone, regardless of fee. The Federal Reserve ruled in 2010 that consumers have to opt-in to overdraft protection in order to be charged, otherwise their cards should be rejected. Opt-in to these types of services and you're basically paying the bank for the favor of not lending you money. In the words of infomercial hosts, there's got to be a better way.

And there is. First of all, if your bank offers you overdraft protection upon account opening (and per the 2010 law, it has to offer it, not just automatically apply it), don't take it. You're also allowed to opt out of overdraft protection later on, so if you're a chronic overspender, contact your bank and ask to have the service turned off.

If you want to go a step further, Elle Kaplan, CEO and founder of LexION Capital Management, recommends staying away from debit cards altogether.

"Think about forgoing a debit card, which links directly to your checking account, in favor of an ATM card, which only allows you to withdraw cash," she said. "I've always opted for an ATM-only card because in case of loss or theft, someone can't simply take the card and start charging purchases to your account."

And, as always, carefully monitor your account activity to keep your likelihood of overdrawing to a minimum. "Keep careful track of how much money is in your account at any one time so that you're never hit with an overdraft fee," Kaplan said. "Pay special attention to any automatic transfers and make sure that you've always got enough money in your account to cover them. Set up reminders in your calendar to check."

3. Big Deposit Fee

This one falls in the "I'm sorry your diamond shoes are too tight" category: Many banks have started charging their biggest customers fees for parking large amounts of cash in their accounts, even though big deposits are part of what fuel financial institutions. It's basically the opposite of a minimum balance fee and it's wholly avoidable.

If you're wealthy enough for this to be an issue, you shouldn't be keeping all your cash in one account anyway; the FDIC only insures total deposits at a single institution for up to $250,000 per depositor. Follow Warren Buffett's advice and keep your money in a number of safe, low-cost, long-term investments, like index funds. If you're saving for a specific goal — such as retirement — you probably want to park your savings in a specialized product, such as a tax-advantaged Roth IRA or 401(k).

4. Early Account Closure Fee

Banks began charging a fee for closing account within months of opening after 2011's first Bank Transfer Day, in which hundreds of thousands of former bank customers closed their accounts and joined local credit unions in protest of — yep — predatory fee structures.

The amount of time required to keep an account open and the fee charged if you don't can vary by institution, but in general, this expense can be pretty hefty, around $25 to $50 at most major banks.

5. Returned Mail Fee

If you move, don't forget to fill out a change-of-address form online or at your local post office. If your bank statements are sent back marked "return to sender," you could incur a fee, usually around $5, which banks say is justified because returned mail often triggers extra fraud protection.

You can also avoid this charge by going paperless completely and opting for e-statements, a choice your bank might even reward you for with a higher interest rate or waived service fee. (Banks are fans of paperless correspondence too, because it means they can save money on postage costs.) Check to see if your financial institution offers any incentives for making the switch.

6. Minimum Balance Fee

They're usually not even hidden in the fine print, but these charges can easily sneak up on you, especially if you change your depositing habits.

Most bank accounts have a minimum balance threshold you have to clear in order to waive a monthly service fee — say, $1,000 to avoid a $12 recurring expense. Often, the higher the interest rate on the account, the higher your minimum balance requirement, though many institutions also waive the charge if you have a regular, automated incoming deposit.

Like many fees, these kinds of monthly service charges are the hardest on depositors with less reliable income streams. Te-Erika Patterson, a freelance journalist and writer, said she recently noticed she'd been charged a $12 service fee on her Bank of America account.

"When I looked it up, it was a fine print penalty for not maintaining a certain amount in my account for the month and not receiving any direct deposits over $250," she said.

The solution in this case is to find an account with a low minimum balance requirement or a monthly fee that's more easily waived; some accounts will let you duck it by just signing up for e-statements. But if you don't want to switch accounts or banks, there might be a few creative ways to get around the charge.

"To remedy the issue, I just take money from my Paypal account and withdraw it into my bank account every month," Patterson said. "That counts as a direct deposit."

Lucy Mueller contributed to this article.

Disclaimer: Financial institutions mentioned in this article might be clients. All fees and rates are current as of Aug. 14, 2015, and are subject to change.

Checking Account Fees Comparison Chart


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