How to Choose a Checking Account With Fewer Fees

A checking account is supposed to be a place to keep your money, and for many people, it is also a place where money quietly leaves.

A monthly maintenance fee, an out-of-network ATM charge, an overdraft fee, a paper statement fee. Each one seems small, and together they can add up to a few hundred dollars a year. A fee of $12 a month is $144 a year, for an account that may not need to cost anything. Many people pay these fees for years, simply because they never look.

The good news is that you have choices, and many good checking accounts have few or no fees. This guide shows you how to understand the common fees, how to avoid them, what features to compare, and how to switch accounts safely. It is written with the United States in mind, so details may differ where you live. It is general education, and the terms of any account can change, so please read the details before you open one.

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Start by finding out what your current account costs

Look at your last three months of statements, and highlight every fee. Monthly maintenance fees, overdraft or non-sufficient funds fees, ATM fees, paper statement fees, and any others. Add them up, and multiply by four to estimate a year. If you are new to managing a bank account, my personal finance tips young adults need may help with the basics.

Also find your bank’s fee schedule, usually on its website. It lists every possible charge and the conditions for waiving them.

Write the total on a page. This is the amount you are trying to reduce.

Add up the fees on your last three statements, and write down your estimated yearly cost.

Learn the common types of fees

Monthly maintenance fees are charged just for having the account, often waived if you keep a minimum balance or set up direct deposit. Overdraft fees are charged when you spend more than you have and the bank covers it. Non-sufficient funds fees apply when a payment is declined. ATM fees apply when you use a machine outside your bank’s network, and sometimes the machine’s owner adds a fee too.

Other fees include charges for paper statements, wire transfers, stop payments, foreign transactions, and replacement cards. Some accounts also charge for inactivity.

Knowing the list helps you spot the ones that apply to you.

Highlight the fees on your fee schedule that you have actually paid, or are most likely to pay.

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Know the ways to avoid fees on any account

Many fees can be avoided with a few habits. Set up low-balance alerts, so you know before an account runs short. Keep a small buffer in your checking account. Use only in-network ATMs. Choose electronic statements. If you want to stay ahead of account problems in general, these financial mistakes beginners should avoid are worth a read.

Ask your bank about overdraft options. In the United States, you may be able to choose not to have overdraft coverage on debit card purchases, which means a purchase would be declined instead of triggering a fee. Check the terms for your account.

Meeting a minimum balance or setting up direct deposit may waive a monthly fee, so check the conditions.

Set up low-balance alerts on your account, and ask your bank about your overdraft settings.

“A checking account should hold your money, and it should not quietly take some of it each month.”

Look at the types of banks and accounts

Different kinds of institutions tend to have different fee patterns. Online banks often have low or no monthly fees, because they have fewer branches. Credit unions are member-owned, and many offer accounts with low fees. Large national banks offer many branches, and often charge fees unless you meet certain conditions. Local community banks vary.

No single type is best for everyone. Think about what you need, such as branch access or the lowest cost.

Make a short list of three or four options to compare.

Make a short list of three or four banks or credit unions to compare, with a mix of types.

Compare Your Account Costs in One Place

The free Money Reset Workbook gives you a clear page to record each account’s fees, so you can see which one costs the least.

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Check the features that matter to you

A low fee is only part of the picture. Look at ATM access. Is there a large network of free ATMs, or will you pay to withdraw? Is there a mobile app that works well, with mobile check deposit? How easy is it to reach customer service? Does the account offer early direct deposit, or tools to avoid overdrafts? If you are building your money skills, these financial life hacks that help young adults stretch their money may give you ideas.

Also consider the interest rate. Many checking accounts pay little or no interest, so it should not be your main reason to choose one.

Rank the features by importance, and look for the account that covers most of them.

Write your top five must-have features for a checking account, in order of importance.

Confirm that the account is insured and read the fee schedule

In the United States, check that the bank is insured by the FDIC, or that the credit union is insured by the NCUA. This protects your deposits up to certain limits, so check the limits for your situation.

Before you open an account, read the fee schedule and the account agreement carefully. Look for the monthly fee, the conditions to waive it, overdraft and non-sufficient funds fees, ATM fees, and any minimum balance or minimum deposit.

Take a screenshot or save a copy of the terms, so you have a record of what was promised.

Read the fee schedule for your top choice, and write down the monthly fee and the conditions to waive it.

Be careful with sign-up bonuses and promotions

Many banks offer cash bonuses for opening an account. These can be worthwhile, if you meet the conditions and the account has low fees. Read the requirements closely. Many ask for a minimum direct deposit, a minimum balance, or a number of transactions, within a set time. If you do not meet them, you may not get the bonus, and you may be left with an account that charges fees. For help keeping your money habits steady, take a look at these personal finance tips that help you build better money habits.

Consider whether you would choose this account without the bonus. If not, think twice.

Bonuses may also be taxable, so keep that in mind.

Before you chase a bonus, write down its conditions, and decide whether the account is a good fit without it.

Make the switch carefully, so no payment is missed

Switching accounts takes a little planning. Open the new account first, and keep the old one open for now. Move your direct deposit to the new account. Update any automatic payments, bills, and transfers. Check for any checks that have not yet cleared, and any pending transactions.

Keep a small amount in the old account until everything has cleared, usually one or two billing cycles. Then close it in writing, and ask for confirmation that the balance is zero.

Make a list of every payment tied to the old account, and cross each one off as you move it.

Make a list of every automatic payment and deposit tied to your current account.

Review your account each year, and keep the habit

Banks can change their fees and terms, so check your account at least once a year. Read any notices that arrive from the bank. If your fees have gone up, or your needs have changed, shop again.

Keep an eye on your statements each month, so you catch fees early. If a fee appears that you think is a mistake, call the bank, and ask for a refund. Many banks will refund a first fee if you ask politely.

A few minutes of attention each year can save you a surprising amount.

Put a yearly bank account review on your calendar, and a monthly statement check.

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