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What Does “Free Checking” Actually Mean?


No one likes to pay for a checking account.

After all, a checking account is practically essential in a world where cash is becoming less common. In fact, some employers require potential hires to have an account because they only pay employees by direct deposit. Should you really have to pay for something you’re required to have?

Of course not. You just have to find a free checking account.

What Is a Free Checking Account?

Many banks and credit unions charge monthly maintenance fees for checking accounts. “Free checking” means an account has:

  • No minimum balance or limit on number of transactions
  • No regular transaction fees or service fees
  • No monthly service fees
  • No withdrawal or transfer fees

If an account simply offers you ways of avoiding fees depending on your account usage, then it’s not legally considered a free checking account.

Don’t be afraid to shop around before opening your account. From truly free accounts to accounts with minimal fees, there’s certainly something out there that is sure to meet your specific needs.


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Free, But Not Fee-Free

When it comes to truly free checking, you might be wondering if there any hidden costs associated with free checking.

Every institution has its own list of fees, so depending on which bank or credit union you go with, you might still have to pay a minimum deposit to open an account. And it’s likely you’ll still be charged if you overdraft your account.

On average, financial institutions charge $10 to $12 per month in maintenance fees on checking accounts.

If you’re opening a free checking account, ask about potential fees for:

  • Stop payment
  • ATM usage
  • Debit card usage
  • Returned deposits
  • Wire fees
  • Returned checks due to non-sufficient funds (NSF)
Find an institution that gives you control over your money with free checking.

Why Is It Important to Have a Free Checking Account?

The great thing about free checking is that it offers the same features and services on a daily basis as regular checking — without the fees.

The daily perks of free checking can lead to some big picture benefits as well:

Cost Savings & Increased Wealth

It’s easier to grow your finances if you have more cash. Whether it’s saving money on entertainment or finding ways to boost your tax refund, cutting unnecessary expenses — like fees — puts money back in your pocket.

On average, financial institutions charge $10 to $12 per month in maintenance fees on checking accounts. That may not seem like a lot, but over a decade that adds up to over $1,200! That’s money you can save or invest to grow your personal wealth.


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When a financial institution requires you to maintain a certain balance or deposit a certain amount each month, that’s one more thing you have to keep up with. Whether you’re just starting out with a small paycheck and big rent, or you’re more established with a mortgage and retirement account, your finances can be complicated enough without having to follow unnecessary rules.


Maybe you’re a single parent or student, or maybe you’re living on a fixed income. Maybe you subscribe to the zero-based budget philosophy. Whatever your reason, there may be times you can’t or don’t want to keep a minimum amount of money in your checking account.

With free checking, you’re free to move money where you need to and as you need to without fear of penalties.

Each bank or credit union sets its own minimum deposit amount, so ask your institution what they require.

Minimum Balances Benefit Banks, Not You

Financial institutions like their account holders to maintain a minimum balance because it benefits them. When you keep more money in your account, it allows the institution to lend more money. Plus, they can make money from fees they charge when customers fall below this minimum. That said, there’s a big difference in the way banks and credit unions put those profits to work. Banks return their profits to investors, but credit unions return their profits to members in the form of lower fees, lower loan rates, and higher savings rates.  

Remember that you don’t have to work with an institution that doesn’t support your needs. Try to find an institution that gives you control over your money.

Don’t be afraid to shop around before opening your account.

Who Offers Free Checking Accounts?

Free checking accounts used to be more common, but many financial institutions are phasing them out. reports that only 38% of checking accounts at large banks are free, down from 70% in 2009. However, they do still exist. You’re most likely to find them through online banks, local banks, and credit unions.

Online Banks

Online banks offer competitive banking options. They can serve people across the country, competing for customers with large banks, but they keep their costs low by not relying on physical locations with utilities, security, maintenance, and other costs. As a result, they frequently offer free checking, higher interest on savings accounts, and may also offer interest on your checking, too.


An online-only savings account could earn you more than a regular savings account.

Local Banks

Small, local banks may not serve as many customers, but they also have fewer expenses. They’re frequently more responsive to their customer base, and while they’re still for-profit institutions, they don’t depend on massive profits like larger banks. That often translates into more freebies for customers.

Credit Unions

Your best bet for finding free checking is through a credit union. According to the National Credit Union Administration (NCUA), 76.5% of credit unions offer free checking.

Not only that, but you’ll earn interest (known as “dividends”) on your checking account at a credit union. Other credit union perks include higher dividends rates on your savings accounts, lower interest charges when you need to borrow, and more say in how your financial institution runs.

A truly free checking account does not have a recurring fee and does not require a minimum balance or deposit.

How Do You Qualify for Free Checking?

The first step to qualifying for free checking is to qualify for a checking account. Many banks and credit unions require:

  • Two forms of identification (a valid driver’s license, state-issued ID card, or passport)
  • A social security card or taxpayer identification number
  • Proof of address (usually a utility bill)

Some institutions may also require additional documents. For instance, if you’re opening a student checking account, then you’ll likely need your student ID card. You may also be required to make a minimum deposit.

Each bank or credit union sets its own minimum opening deposit amount, so ask your institution what they require.

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The Takeaway

There’s no reason to pay for a service if you can get it for free. It might take a little research to find the right bank or credit union for you, but the savings and flexibility you’ll get from free checking will make you glad you switched.

Discover Free Checking at PenFed

The features you want without the monthly fees.