Are Checking Accounts Really Free?

Are you shopping for a new checking account? If so, you’re probably tired of hearing things like “free bill pay” and “free checking” only to find out that those programs are far from free. The truth is, there are a lot of hidden fees out there, and you could end up signing up for a checking account that costs far more in hidden fees than that other account that had a small monthly maintenance fee instead. As you’re thinking about different checking account options, here are a few things to keep in mind.

Free Versus No Fees

If your checking account is listed as a “free” account, that doesn’t necessarily mean you won’t have any fees. In fact, you may be surprised at just how many fees can be associated with a “free” checking account. A smart consumer will look at all the information about any possible checking account before signing on the dotted line. Everything should be given to you up front, so be smart and do your homework.

Minimum Balance Fees

Many “free” checking accounts are only free as long as you have a minimum balance in the account. In some cases, that balance can be several hundred dollars and, should your account drop even one dollar below that set limit, you end up getting charged a fee. Before you sign up for a checking account, ask yourself if you’ll be able to meet the minimum balance requirements, or else you’ll end up paying a host of fees for that “free” checking account.

Other Fees

Depending on the institution, there could be a host of other types of hidden fees associated with your “free” checking account. Be sure to really look at the bank account information and ask for a fee schedule with any bank you’re considering. That schedule will detail any other fees that you may be charged, including fees like account maintenance or service, fees for using ATMs, check fees and more. If you think those fees may be too much for you, then keep looking for another banking option.

Overdraft Fees

If you’re the type of person who occasionally overdrafts their account, this is one area that you’ll really want to pay attention to. Overdraft fees on free checking accounts can often top $30 or $40 per overdraft, and that money really adds up fast. If that idea scares you, then look for a checking account with some overdraft protection which, though it may mean a few dollars of maintenance fees every month, can save you a lot of money in the long run.

Try A Credit Union

It’s getting harder and harder to find truly free checking these days. A recent survey from Bankrate showed that only 38 percent of checking accounts at larger banking institutions are still free. That number is down by half from 2009, when that number was a much higher 76 percent. That means you may want to consider looking into a credit union, where the percentage of credit unions offering free checking is still 72 percent, according to Bankrate.

Deborah Flomberg is a theater professional, freelance writer and Denver native. Her work can be found at Examiner.com.