Are Free Checking Accounts the Best Checking Accounts?

10/09/2018

People are naturally drawn to the word “free”, and when it comes to checking accounts, free accounts do offer a lot of advantages. However, are they really the best checking accounts? The answer depends on your situation and your bank’s definition of a free checking account.
 

What Is a Free Checking Account?

A free checking account offers basic services and doesn’t require a monthly fee. That means you can make deposits and purchases without incurring any charges. However, you may need to buy checks or pay overdraft fees, ATM surcharges, or similar costs. Banks need some funds to cover operating costs, and as a result, there are few banks with truly zero fees.
 

How Do You Find the Best Checking Account?

When trying to find the best checking account, make sure to compare the fees versus benefits of each account. For instance, some banks offer reimbursements for ATM fees incurred at out-of-network ATMs. Others have unique ways of dealing with overdraft fees — e.g., you may be able to link a line of credit or your savings account with your checking account so if you spend over your balance, the additional funds are drawn from those other sources. Still others offer rewards such as cash back. Ideally, you need to weigh all the pros and cons to decide which account is right for you.

Remember, most banks offer a variety of checking accounts, and while a free checking account may be right for some people, it isn’t necessarily the best option for everyone. When opening an account, talk with a banking manager about how you plan to use the account and ask them which option is the best fit for your needs.
 

Is a Free Bank Account Always the Best Option?

If you just need a basic account to deposit your paycheck and pay a few bills, a free checking account may be your best option. With truly free checking, you get free access to ATMs in your bank’s network. You don’t need to maintain a balance, and you don’t have to pay a monthly service charge. Plus, you can access tools such as online and mobile banking, bill pay, mobile check deposit, and e-statements.

However, a lot of checking accounts that charge service fees offer more benefits, and you can often get the service fee waived if you meet certain requirements. For instance, the Rewards Debit Checking account at Blue Hills Bank charges a $10 monthly service charge, but as long as you set up e-statements and have direct deposits totaling at least $500 per statement cycle, that fee is waived. Effectively, that makes this account free for anyone who has a regular paycheck or benefits check. Arguably, this account is even more valuable than a traditional free checking account because you can get up to $10 in ATM surcharges from other banks reimbursed every cycle plus $0.10 for every $10 debit card purchase you make.

A relationship checking account generally has a higher monthly service fee, but again, you may be able to get it waived if you meet certain requirements. You also receive all the benefits you do with a standard checking account as well as free checks, free money orders, interest on your balance, unlimited reimbursements of ATM fees, and no stop-payment fees. Note that offers are subject to change. Check with a personal banker for the exact details.
 

Which Checking Account Should You Choose?

The right account depends on your personal circumstances. If you can easily meet the requirements to get service fees waived, you may not need a free checking account. Instead, you should take advantage of all the benefits offered by an account with a service fee. For some bank accounts, the benefits are well worth the fees, even if they aren’t waived or mitigated in any way.

On the other hand, if you are unable to meet the requirements, you may be better off taking advantage of a free checking account. Still in other cases, you may want to weigh your costs. For instance, if you know that you have to pay a fee at the ATM closest to your house, you may want to sign up for an account that offers free ATM fee reimbursements. Those reimbursements may outweigh any monthly fees you have to pay.
 

Diverse Checking Accounts for Diverse Needs

At Blue Hills Bank, we know that there is no one-size-fits-all solution to checking. That’s why we offer our clients a variety of personal and business checking accounts as well as accounts that are tailored to the unique needs of government entities. To find the right account for your needs, contact us today. We look forward to working with you.