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While it may have been a while since you sat down and actually wrote out a paper check, having a checking account is still important. Many people don’t even know if they have some form of free checking, or if their credit union charges them for the account. Having the right type of checking account can make a big difference in your financial life.
A checking account—even a free checking account—helps you manage your budget by giving you the ability to use a debit card, pay bills online, make deposits and withdraw cash from an ATM, write the occasional check, and just generally use your money for day-to-day living. It also helps you separate your ‘everyday money’ from your ‘save-for-someday money,’ making it easier to safely set aside funds in a separate savings account.
Some banks and credit unions charge you fees for a checking account or offer free checking accounts that may still have some costs that are tangentially associated with their usage. At first it might not seem like a big deal to pay a few dollars every month. But like all things financial, even the cost of little things can add up quickly.
Why does free checking matter?
Free checking allows you avoid monthly maintenance and other fees, so you can keep more of your money. And those savings add up over time. For example, let’s say your bank charges you a $5.00 maintenance fee for your checking each month, and then you incur another $6.00 each month in ATM fees. Over a year, this adds up to $132.00—enough to cover the cost of a year's worth of many popular streaming services.1
Free checking accounts at credit unions offer even more perks. Credit unions are not-for-profit, so they can offer lower fees and competitive rates overall, as well as offer financial support to local community non-profits—so you get the benefits of free checking while becoming part of a bigger, better financial movement.
Benefits and drawbacks of a free checking account
| Benefits | Drawbacks |
| Free checking means that the bank or credit union cannot charge you a monthly maintenance fee, fees for exceeding a specified number of transactions, fees for not meeting a minimum balance, or any fees to deposit, withdraw, or transfer money. | The words ‘free checking’ can lull people into thinking they’ll never be charged a fee for account related activity. However, there may still be fees for using out of network ATMs, fees for bouncing a check or to stop payment on a check, fees on a dormant account (not using the account for a long time), check-printing fees, and others. |
| Less stress. With a free checking account at a credit union, you’re less likely to be surprised by end-of-the month fees you didn’t expect. | Free checking accounts may not always offer helpful features such as overdraft protection services. |
Even if you have free checking, there may be associated fees
At its most basic, free checking is an account with no monthly fees. But it’s important to look beyond the basics so you’re not caught off guard.
Common types of fees include:
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- Overdraft/non-sufficient funds (NSF) fees
- ATM fees or fees for out-of-network ATM use
- Online bill payment fees
- Stop payment fees
- Fees for receiving a paper statement in the mail
- Charges for things like getting cash back on debit card purchases
- Fees for letting the account sit dormant for too long
Tips to get the most out of your free checking account
Remember, a free checking account is meant for your daily living expenses. That’s why it’s a good idea to leave just enough money in your free checking account to pay your monthly bills. Transfer the rest to a savings or money market account that will earn dividends. But pay close attention to your balance, to avoid overdraft or NSF fees.
Check to make sure your checking account is right for you
“Free” usually sounds good, but make sure that free checking account doesn’t cost you in other ways. Many credit unions will offer other checking account options that aren’t free but offer other advantages that may fit your spending lifestyle better.
