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Free Checking Isn’t Really Free

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Does your bank offer free checking? If the answer is no, you need to enter the 21st century and switch to one that does offer free checking (I have a Bank of America My Access Checking account, no fee, no minimum balance requirement, if you want to thank me and have BOA give me a $25 referral fee [you get nothing though], email me because we need to go through their referral process). Now, if the answer is yes, what is the minimum balance you need to carry in order to be eligible for free checking?

That minimum balance times the difference between the checking account’s interest rate (likely under half a percent) and 5% (the going rate for most online savings accounts), is how much that free checking costs you. For example, if you have a free checking account with a $1,000 minimum balance and the interest rate is 0.1%, you’re losing $49 a year in lost interest. That’s the same as paying about $36.75 (25% tax bracket) a year for your free checking.

So, is your checking free or just… kinda free?

{ 10 comments, please add your thoughts now! }

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10 Responses to “Free Checking Isn’t Really Free”

  1. I just opened a new checking account with no minimum balance, but it comes with a savings account that comes with a guarenteed 5.25% interest on the savings account through the end of the year. You need a minimum balance of $2500, but I’ll just transfer the majority of my online savings into that and get direct deposit set to go there. Then I will not have to wait a few days to transfer money between my savings and checking accounts, and money that is not accounted for will already be in savings without me having to remember to transfer it.

  2. bk says:

    My checking account is the new HSBC payment account. It has worked well so far, and I’ve switched all my auto payments to it. I keep as close to 0$ in it as possible. I transfer money from the savings account right before it is due (keeping in mind the 6 transfer per rolling 30 days limit). I do have a local bank with free checking and a 0$ minimum if I ever need to deposit a check (rarely ever) and then transfer to HSBC.

  3. CK says:

    Our checking with National City is free as long as we direct deposit a payroll check with them, no minimum balance. Plus free checks, online bill pay, and a safe deposit box.

  4. keith says:

    salemfivedirect.com

    No minimum balance – 5%+ – $15 atm refund.

    Is your checking paying 5% interest, or just…kinda somewhat sort of near 5%?

  5. Tim says:

    mine requires $15k min balance, but any deposits count towards the $15k. so, i have the $15k in laddered cd’s.

  6. Tim says:

    oh, i forgot my point. my point was that you probably can get your minimum counted if deposited into their savings account or cd’s.

  7. Young says:

    Yup, my free checking is really free. But I am planning on closing my BoA checking, because, while they don’t have a minimum, they seem quite eager to slap on other fees that I can do without!

  8. Bonnie says:

    I have a wellsfargo account (checking). Not a good bank to deal with. While I accidently had the wrond account to paysomething through paypal I also deal with IBC Bank, I had wellsfargo setup instead of IBC. I accumualated overdraft fees on wellsfargo and I noticed that so I fixed in paypal and made IBC and my primary. But in the mean time Wells fargo charged me the over draft fees but they did not pay the people I needed them to pay. They charged me 4 over drafts fees each 35.00. I went in the main branch told them my story at least they could have taken off one but nope they said it was not an accident. So
    moral of the story is watch what you do when you sign up with these big banks.


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