By Louis DeNicola, Cheapism.com
The New Year is an opportunity to start fresh, and for many folks that means getting your finances in order. Perhaps it's time to wave goodbye to your bank in favor of one that doesn't charge ridiculous fees and pays relatively high interest.
Switching banks may seem like a big deal, but a few hours of work are all that's usually necessary. It's easy to open a new account, which may require a minimum deposit of $25 or $50. The process can get a bit hairy, however, when it's time to transfer funds from the old account to the new and close out the pre-existing account. (You can't do that before all outstanding checks have cleared and you've notified any company or charity that is paid through an automatic deduction from your account.)
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But identifying which bank deserves your business may be the most time-consuming element. We found several banks that offer free checking accounts with no minimum balance. Some also offer free ATM usage nationwide, do not charge overdraft fees, and even pay interest that's as high, if not higher than, rates paid for savings stowed at the major banks.
Free Checking. Most of the free checking accounts we found that fit these criteria operate almost entirely online, and may not be suitable for every consumer. For starters, although these no-fee checking accounts accept direct deposits and account holders can deposit checks using a smartphone or computer, depositing cash can be a hassle when there's no branch or ATM nearby. Most customers deal with this by having two accounts, one with a local credit union or a large bank with a local branch, and the other with the online bank. With fees so low and interest rates relatively high, and ATM withdrawal fees almost always refunded, the online banks typically hold most of a customer's assets and support day-to-day spending while the local bank (or branch) serves as an intermediary.
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High-Yield Checking Accounts. For consumers seeking the best return on their assets, high-yield checking accounts offered by regional banks and credit unions are usually the best option. The institutions offering such accounts may not boast the latest technological wizardry, such as taking deposits through smartphones, or the lowest fees, but they're a good choice for anyone who wants to maximize the return on the money in their checking account.
Bankrate posted a list of 56 banks with high-yield checking accounts in 2013; interest rates range from 0.51 percent up to 3.25 percent. Some even provide ATM-fee reimbursements. These accounts often require account holders to sign up for online banking, opt out of paper statements, bring along a monthly direct deposit or online transfer, and use their debit card for a minimum number of purchases each month. Some high-yield accounts are only available to residents of select states or regions (e.g., Jeff Davis Bank for depositors in Louisiana and Southeast Texas) while others can be opened regardless of residency (e.g., Cross Keys Bank). These banks often set a limit on the amount of money that qualifies for the high interest rate, usually somewhere between $10,000 and $25,000; beyond that (or if the requirements aren't met) the rate drops.
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Consumers who don't maintain a large balance in their checking account but want to maximize earnings might look into Extra20 Checking, a service promoted by Santander Bank (formerly Sovereign Bank). Customers receive $10 a month for paying two bills through their online account and an additional $10 a month if they have a minimum $1,500 in direct deposits. (Direct deposits are also necessary to avoid a $10 monthly account fee.) Santander charges $3 for each cash withdrawal from other banks' ATMs.
Checking Account Fees Comparison Table
||Balance Needed to Avoid Monthly Maintenance Charge||
|Overdraft Fee (If Opting In for Overdraft Protection)||
|Interest Rate||Branch Locations|
|Ally||$0||Nationwide||$9||Yes||0.4 percent (balances up to $15,000) or 0.75 percent (balances over $15,000)||No|
|USAA Secure Checking||$0 ($25 to open)||10 free withdrawals nationwide and $15/month refund for other banks' fees||$0||Yes||0.1 percent||15 branches and nearly 400 ATMS|
|Bank of Internet Rewards Checking||$0||Nationwide||$0||Yes||Up to 1.24 percent depending on services used||No|
|Charles Schwab High Yield Investor Checking||$0||International||$0||Yes||0.1 percent||No|
|Capital One 360 Checking||$0||No fees at Capital One or Allpoint ATMs||$0||Yes||0.20-0.85 percent depending on balance||1,000 branches and 2,000 ATMs|
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