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鈥淔ree checking鈥� and 鈥渇ree savings鈥� may be phrases you commonly hear around banking, but what do they really mean? Are there benefits of going with a free option? And how do select the best choice for you?
Many banks and credit unions charge monthly maintenance fees for checking accounts. 鈥淔ree checking鈥� means an account has: no minimum balance or limit on number of transactions, no regular transaction fees or service fees, no monthly service fees and no withdrawal or transfer fees.
There鈥檚 no reason to pay for a service if you can get it for free, the . If an account simply offers you ways of avoiding fees depending on your account balance, then it鈥檚 not really free, PenFed Credit Union鈥檚 team noted.
鈥淒on鈥檛 be afraid to shop around before opening your account,鈥� PenFed Credit Union鈥檚 experts recommend. 鈥淔rom truly free accounts to accounts with minimal fees, there鈥檚 certainly something out there that is sure to meet your specific needs.鈥�
It may require some research to find the best free checking account for you, but a found the percentage of free checking accounts increased for the sixth straight year. The study, which surveyed 10 banks and thrifts in each of the 25 large U.S. market, found that nearly half (48 percent) of noninterest checking accounts are free — the highest level since 2010.
When on the hunt for the best free checking account for you, it鈥檚 important to be aware of hidden costs. Every institution has its own list of fees, so depending on which bank or credit union you go with, you might still have to pay a minimum deposit to open an account. And it鈥檚 likely you鈥檒l still be charged if you overdraft your account, PenFed Credit Union鈥檚 team said.
The PenFed team recommended that if you鈥檙e opening a free checking account, be sure to ask about potential fees associated with stop payment, ATM usage, debit card usage, returned depots, wire fees and returned checks due to non-sufficient funds.
There is great value in a free checking account. It offers the same features and services as a regular checking account 鈥� just without the fees. Using a free checking account can lead to some long-term benefits as well. For example, adding that money you would have used on fees back into your pocket, the PenFed team pointed out.
Using free checking can be a simpler path, too. Some financial institutions require maintaining a certain balance or depositing a specific amount each month 鈥� and that鈥檚 just one more thing to keep up with, the PenFed Credit Union team noted.
鈥溾�inances can be complicated enough without having to follow unnecessary rules,鈥� PenFed鈥檚 team said.
Flexibility is another perk of free checking — you鈥檙e free to move money where you need to and as you need to without fear of penalties, the PenFed Credit Union team said.
And remember to be mindful of minimum balance requirements and find a financial institution that gives you control over your money. Many financial institutions like account holders to maintain a minimum balance because it benefits them, PenFed鈥檚 team noted. Doing so allows them to have more money to lend, and charge fees when customers fall below the minimum balance requirement.
鈥淩emember that you don鈥檛 have to work with an institution that doesn鈥檛 support your needs,鈥� PenFed鈥檚 experts said.
If you鈥檙e on the hunt for a free checking account, you may be more likely to find them through online banks, local banks and credit unions, PenFed Credit Union said.
Online banks offer competitive banking options. They can often keep costs low because they don鈥檛 have a physical location, so they are frequently able to offer free checking, higher interest on savings accounts, and may also offer interest on your checking, too.
Local banks have a smaller customer base and don鈥檛 depend on massive profits like larger banks do. That can translate to wins like free checking for its customers.
Credit Unions can be your best bet for securing free checking. In fact, 76.5% of credit unions offer free checking, according to . Members can earn dividends on checking accounts at a credit union. Additionally, credit unions offer higher interest rates on savings accounts and lower interest charges for borrowing.
So do you qualify for a free checking account? First you need to head to a bank or credit union with a few things: two forms or ID, a social security card or taxpayer ID number and a proof of address. You may need to make a minimum deposit in that checking account as well.
At the end of the day, PenFed Credit Union鈥檚 team recommends doing your research to find the right free checking option for you.
鈥淭he savings and flexibility you鈥檒l get from free checking will make you glad you switched,鈥� the PenFed Credit Union team said.
Read more about free checking on . PenFed Credit Union is federally insured by NCUA.
