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Advantages of an (actually) free checking account

"Free" seems like a pretty easy concept to understand. If something is free, it should cost you nothing, right?

If you've ever tried to take advantage of a "Kids Eat Free" offer, you may have already figured out, sure the little ones get free food off the kids' menu... but ONLY if an adult purchases the full-price adult fare. Is that still free, or just free-ish?

Think about the concept in terms of your checking account. In a 2020 Bankrate survey of ten banks in large cities, they found that 47% of checking accounts are free accounts...

Oh, wait – let's look at that survey closer.

Those free accounts were also non-interest earning accounts. So yes, they are "free," but those account holders got nothing for giving their money to those banks. In short, the money was free to the banks. And more than 50% were getting nothing AND paying for their account. Hmm.

It also means all the other interest-earning account holders paid the megabanks to hold their money so they could use it to make loans to their borrowers.

When people ask why is it important to have a free checking account. The better question is: What are the advantages of an actually free checking account?  It's your money and you should keep all of it for your own use.

 

Free checking accounts should be free

The way a bank earns money (or a credit union earns money for its members) is by lending money and charging interest for borrowers to use that money. They rely on people like you giving them your money so they can have money to lend. Simple enough.

So, you’re helping them make money by entrusting them with your funds while they make the profit from lending it out. Awful nice of you. But most institutions thank you by charging you a monthly fee. Even a lot of the “free” accounts come with fees for other services or if you don’t meet certain qualifications. That's not free. Your checking account should include all the basics — mobile deposit, ATM withdrawals, debit card transactions, online banking access, a mobile banking app, e-statements, bill pay — at no cost to you.

If you pay a monthly maintenance fee just to let a financial institution hang on to your money for you, you may be missing out on the most important part of free checking: keeping all of your money.

 

Keep all of your money's power, too

Your money is a representation of your power, your skill, and your knowledge — all the talents you possess that help you earn it. When you give that money to your bank or credit union, you are giving them your power. A free checking account is the very least you should get for entrusting your bank or credit union with your financial power.

Accessing your money, whether making a purchase or simply withdrawing from an ATM should not diminish your financial power. According to The Ascent, of the six most important features of a free checking account, two of them are your ability to access your own money.

When your personal checking account gets hit with ATM withdrawal fees, you are not getting the benefits of an actual free account. Even if your bank or credit union cannot control the fees of those other ATMs, a truly free checking account should refund those fees. Accessing your money should be free.

 

Your loyalty as a customer is also free

Consider your first personal checking account. Account opening may feel like a process, but it's really the beginning of a long-term partnership. When you deposit money into your account, you are holding up your end of the partnership. The service you receive in exchange for your business shouldn't come with qualifiers.

Being charged a fee because you do not meet the minimum balance requirement is a partnership to avoid. An actual free checking account should not be based on your account balance. Putting a minimum dollar amount on what you keep in your account may be telling you that your partnership is strictly based on how much money you deposit, not on your loyalty as an account holder.

Your loyalty as a customer is free — free to go somewhere else where your money and your account are valued.

 

Rewards need to be free

Offering rewards checking accounts is another way to increase customer loyalty, but not if the rewards require a monthly fee. Looking at that Bankrate survey, a checking account that pays rewards to the account holder averaged a monthly service fee of $15.50. That's not free.

Also, the average balance an account holder needed to maintain just to have that fee waived was $7,550. A reward should not require a minimum balance requirement, just like ATM withdrawal fees should be refunded for a checking account to be a free checking account.

An interest checking account should pay you interest on your balance without a monthly fee or a minimum balance requirement. If you have to pay, they aren't rewards. You also shouldn't have to exceed your regular spending activity to earn cash back rewards.

 

Shouldn't everything be free?

Let's put all the cards on the table: checking accounts, even free checking accounts, do have some specific usage account fees. What about NSF and overdraft fees? What about the cost of overdraft protection? Those are not free.

You're right.

As long as your money is in your checking account, you should not have to pay any fees. A free checking account is where you keep your money safe so it is available for you to spend. Any service you use to access your own money — your own source of financial power — should actually be free. Always.

Once a person's money is completely gone from their account, any funds needed to cover additional purchases must be borrowed from somewhere. The financial institution floats a short-term loan to cover that lack of sufficient funds for the account holder. That costs money and no one likes to cover someone else's unexpected shortfall, not even the bank.

If you think there might be squishy moments when you might risk incurring one of these fees, then overdraft protection might be an option to consider. But using a savings account with your checking account, keeping watch on your account balance, and being in control of your financial power can eliminate the need for NSF and overdraft fees.

 

The best advantage of free checking

The best advantage of a free checking account is that you keep all of your own money. That sounds so obvious, right? Yet there are still people who are paying for checking accounts, paying for rewards, and paying to access their own money. Kasasa wants to make that right.

You work hard for your money. Be proud of your money. If your checking account isn't benefiting you, you should take advantage of an actually free checking account. Find the best checking account for you today.

 

Discover more ways to be proud of your money in our previous blog post, "Back to basics: How to manage your checking account."

Tags: Rewards Banking, Banking