Free Checking, Is It Really Free?

The easy answer is sometimes.

The question requires more research to answer honestly. You need to define what part of the checking account is actually free. While some free checking accounts are virtual scams others really do meet some definition of the word free and some are in fact close to the actual definition of free, if only for a period of time.

First, when looking for a free checking account you want to know what you are going to be using your checking account for and know before you go in. I utilize my basic shoppers approach to anything, “I don’t need it to launch the space shuttle, I need it to do… “Then I specifically outline what it is that I need it to do. Too often when we go to buy anything, be it a checking account or any other product we find ourselves seduced by all kinds of “goodies” that sound so good, but when we get past the excitement, we realize we’ve bought far more than we wanted or needed. This is why it is important to know what your basic needs for a checking account are and to research what options might add to your convenience, help you with your payment goals, organization, etc. Research these things and be honest with what you will use and what just “sounds” like it would be nice to have.

Some of the very basic options you will want to think about are ATM access, on-line banking, unlimited check writing, and on-line bill pay. There are plenty of other options that may also be offered but these are the most common I’ve encountered at the “free” level. This is where the differences in “free” checking accounts start to emerge.

There are some accounts, as I mentioned, list themselves as free and by the time you’ve read through all the fine print the only thing that is free is registering for the account. These are the accounts that I think are basically scams. It is one of the biggest reasons you have to be an educated consumer.

A second method that is common in free checking accounts, are those offer options free of fees in exchange for behaviors from you. Some of these include one or combinations of the following. They can include minimum balances, direct deposits of your paycheck, a combination of accounts with the bank (some require a minimum value from all accounts to account for your minimum balance instead of requiring a minimum balance in your checking alone), and direct deposits deducted monthly to your account from a check even if your check isn’t deposited with them. I’m sure you may encounter others but these are the most common I’ve encountered when researching where to put my money. When you account is no longer in compliance with the requirements, in my experience most often the balance requirements, the bank begins to charge the monthly fee associated with that account.

These are the accounts I’ve encountered most often in my banking life. However, another life lesson I’ve learned is once you find the account and you’ve had a wonderful relationship with it, don’t expect that it is a guarantee that your account will last forever. Banks can and do change accounts at will and they don’t always move you to the new “free” account most similar to your old account. Now if you get lazy as we have from time to time about your accounts you discover that you have acquired a monthly fee even though you’ve been rigorous about meeting the requirements of your checking balances, etc. What has most likely happened is your account has been changed and you missed it. You need to go to the bank and discover what your new options are. In our case the bank had moved us to an account with many bells and whistles we never would use and charged us for the functions we previously had for free. We came to discover oddly enough they had a “free” option that merely required direct deposit and no monthly balance requirements. We’d always had direct deposit with this bank. Don’t ever think they are going to give you the account that saves you the most money. That’s your job, to be ever vigilant about your money. I was only caught once more before this lesson became firmly learned.

Now when I’m at the bank or I’m looking at our accounts on-line I do check to see if the name of our account is still in existence. If I don’t see it, I ask because there is a good chance I’m not going to know I’ve been moved until the fees start hitting the account. I would advise others to do the same. Products do change frequently, and it is up to the consumer to keep up.

I recently did find a “free” checking account at our local savings bank. I read through the fine print and I can’t find anything after asking all my questions, reading on-line, and going back and asking more questions. I suspect this account has been established to attract people afraid of the larger bank collapses into the local bank. I further suspected this when after opening the account I received a coupon for cash back for opening the account. My thought is that after a certain number of people are invested in banking there, it will eventually resort to a traditional checking account. Depending on the requirements to avoid the fees we may or may not stay with it. I’ve never had a problem with bank shopping.

On a final note don’t be afraid to research your options. Make sure you know what you need for checking and that the account you get meets your needs. Sometimes you are offered the account that can launch the space shuttle and you really only need a basic account that you manage your basic household expenses and monthly bills. However, sometimes the free account really isn’t free if you are paying high ATM fees, per check fees, limited options for transferring money between accounts, etc. Sometimes you can meet the requirement for the account that isn’t marketed as free and get more options or seek out another bank that offers you what you need, and still keeps you on budget.