The core services that should cost nothing

A good checking account gives you the basics without charging you for them: a debit card, online access to your balance, the ability to move money between your own accounts, and the ability to receive direct deposits. These are not perks. These are the foundation of what a checking account is supposed to do, and you should not pay monthly fees to get them.

Beyond those four things, the account should let you write checks (if you want to), set up automatic bill payments, and see your transaction history going back at least a few months. Again, these should be free. If a bank charges you to write a check or to pay a bill online, that is a sign the account is not designed for everyday use — it is designed to extract fees from you when you make normal banking moves.

The one thing that varies legitimately is the minimum balance required to avoid a monthly fee. Some banks ask for $500, some for $1,500, some for nothing. That is a real choice you need to make based on what you can keep in the account. But the fee itself — the monthly charge for straightforward having the account open — should be zero if you meet that balance or if you set up direct deposit.

Key Takeaways

  • A checking account should never charge you a monthly fee if you keep a modest balance or receive direct deposits, because these are standard features, not premium ones.
  • You should get a debit card, online banking, bill pay, check writing, and the ability to move money between your own accounts without paying extra for any of them.
  • Overdraft fees and out-of-network ATM fees are common but not inevitable — some banks refund them or do not charge them at all, so compare before you open an account.
  • A good account tells you your balance in real time and shows your transaction history for at least 90 days, so you can track where your money goes.
  • If a bank charges you to talk to a person, to move money, or to use basic features, look for a different bank — these charges are not standard across the industry.

What to watch out for: fees that should not exist

Some banks charge you to speak to a person on the phone, to transfer money between accounts, or to close the account. These are red flags. A legitimate bank does not charge you to use your own money or to get customer service. If you see these fees listed, move on.

Overdraft fees are the most common charge you will encounter. This is what happens when you spend more money than you have in the account — the bank covers the difference and charges you a fee, usually $30 to $35 per transaction. Some banks charge this fee multiple times in a single day if you overdraft on several purchases. However, not all banks do this. Some banks straightforward decline the transaction instead, which costs you nothing. Others refund the first overdraft fee each month or do not charge the fee at all if you have direct deposit. This varies widely, so ask before you open an account.

Out-of-network ATM fees are another common one. If you use an ATM that does not belong to your bank, the bank charges you a fee — usually $2 to $3 — to withdraw your own money. Some banks refund these fees if you have direct deposit or keep a certain balance. Some banks have partnerships with other banks so you can use their ATMs for free. A few banks refund all out-of-network fees automatically. This is worth asking about, especially if you travel or do not live near a branch.

How to compare accounts side by side

When you are looking at two or three accounts, make a straightforward list of what matters to you. Do you want to write checks? Do you need a physical branch nearby, or are you comfortable banking online only? Do you travel and need ATM access everywhere? Do you get paid by direct deposit?

Then look up the fee schedule for each bank — this is usually called the "Pricing and Fees" or "Schedule of Charges" document, and banks are required to give it to you before you open an account. Write down the monthly maintenance fee (if any), the overdraft fee, the out-of-network ATM fee, and any other charge that jumps out at you. Do not just look at the headline rate or the marketing language. Read the actual fee list.

Pay special attention to what waives the monthly fee. Some banks waive it if you keep $500 in the account. Others waive it if you get direct deposit, even if your balance is $0. Some waive it if you set up a certain number of bill payments per month. Know which one applies to you, because that is the real cost of the account.

The difference between online banks and traditional banks

Online banks (also called internet banks) typically have lower monthly fees and sometimes no monthly fee at all, because they do not have to pay for physical branches. They make up for it by offering higher interest rates on savings accounts. The trade-off is that you cannot walk into a location to deposit cash or speak to someone in person.

Traditional banks with branches usually charge a monthly fee unless you meet a balance requirement or have direct deposit. But you can go in person, deposit cash, and talk to a banker face-to-face. Some people need that. Some people do not.

There is no single right answer. If you are comfortable with online banking and want to avoid fees, an online bank often makes sense. If you need to deposit cash regularly or want the option to speak to someone in person, a traditional bank is worth the fee — as long as you understand what that fee is and how to avoid it.

Interest on your checking balance

Most checking accounts pay you no interest on the money you keep in them. Your balance just sits there. However, some banks — usually online banks or credit unions — do pay a small amount of interest on checking balances. This is not going to make you rich, but it is better than nothing.

If you keep a large balance in your checking account (say, $5,000 or more), it is worth asking whether the bank pays interest. The rate varies, but some banks pay 4% to 5% on checking balances right now, which is much higher than the typical 0%. That said, do not choose a bank based on interest alone. A bank that pays 4% interest but charges you $15 a month in fees is worse than a bank that pays 0% and charges you nothing.

What you do not need to pay for

Some banks try to sell you add-on services like overdraft protection (a line of credit that covers overdrafts), fraud monitoring, or account alerts. These sound useful, but most of them are either free at other banks or not worth what they cost.

Overdraft protection, for example, sounds like it saves you from overdraft fees — but it usually just replaces one fee with another. You pay interest on the borrowed money instead of an overdraft fee. It is not a win. Account alerts (notifications when your balance drops below a certain amount) should be free everywhere. Fraud monitoring is a legal requirement for banks, not an extra service you should pay for.

The account you choose should include these things as standard, not as premium add-ons. If a bank is charging you for fraud protection or account alerts, that is a sign the account is not designed for you.

Questions to ask before you open an account

Before you commit to a bank, call or visit their website and ask these specific questions. Write down the answers so you can compare them later.

What is the monthly maintenance fee, and how do I avoid it? Listen for the exact conditions: a minimum balance, direct deposit, a certain number of bill payments, or some combination. Make sure you can actually meet those conditions.

What is the overdraft fee, and can I opt out? Some banks let you decline overdraft coverage, which means transactions will straightforward be declined instead of charging you a fee. This is called "overdraft opt-out" and it is worth asking for.

Do you refund out-of-network ATM fees? If yes, under what conditions? If no, how many ATMs do you have in my area?

Is there a fee to close the account? Most banks do not charge this, but some do. You want to know upfront.

Frequently Asked Questions

Do I have to keep a minimum balance to avoid fees?

It depends on the bank. Some banks waive the monthly fee if you keep $500 or more in the account. Others waive it if you get direct deposit, regardless of balance. A few banks charge no monthly fee at all. Check the specific bank's fee schedule to see what applies to you.

What happens if I overdraft my account?

Usually the bank covers the transaction and charges you a fee, typically $30 to $35. However, some banks decline the transaction instead, which costs you nothing. A few banks do not charge overdraft fees at all. You can also ask your bank to turn off overdraft coverage, which means transactions will be declined rather than charged.

Can I use any ATM for free?

Only ATMs owned by your bank are free. Using another bank's ATM usually costs $2 to $3. However, some banks refund these fees if you have direct deposit, and some banks belong to ATM networks where you can use partner banks' ATMs for free. Ask your bank about both options.

Should I choose a bank based on interest rates on checking?

Only if the interest rate is high enough to offset any fees. A bank paying 4% interest but charging $15 per month is worse than a bank paying 0% and charging nothing. Compare the total cost, not just the interest rate.

What is the difference between an online bank and a regular bank?

Online banks have no physical branches, so they usually charge lower or no monthly fees. You cannot deposit cash in person or speak to someone face-to-face. Traditional banks have branches where you can do both, but usually charge a monthly fee unless you meet certain conditions. Choose based on what you actually need to do with your account.