Most checking accounts have no monthly fee, but some do
Whether you pay a fee for a checking account depends on the bank and the account type you choose. Many banks offer free checking with no monthly charge at all. Others charge a monthly maintenance fee—typically $5 to $15—unless you meet certain conditions like keeping a minimum balance or setting up direct deposit.
The fee structure varies widely. A bank might waive its $10 monthly fee if you maintain $500 in the account, or if you receive at least one direct deposit per month. Some banks charge nothing regardless of balance or activity. Others charge fees only when you use certain services, like overdraft protection or paper statements.
The key is knowing what you are signing up for before you open the account. Banks must disclose their fee schedule in writing, usually in a document called the Deposit Account Agreement or Truth in Savings Act disclosure. You can also find fee information on the bank's website or by calling and asking directly.
Key Takeaways
- Free checking accounts exist at most major banks and credit unions, with no monthly maintenance fee under any circumstance.
- Banks that charge monthly fees often waive them if you keep a minimum balance, set up direct deposit, or maintain a linked savings account.
- Overdraft fees, ATM fees, and paper statement fees are separate from monthly maintenance fees and can add up quickly.
- Credit unions typically charge lower fees than banks, and some offer free checking to anyone in their membership area.
- The Deposit Account Agreement or Truth in Savings disclosure document lists all fees before you open the account.
Monthly maintenance fees and how to avoid them
A monthly maintenance fee is a charge the bank takes from your account each month just for having the account open. Not all banks charge this. Many online banks and credit unions do not. But traditional brick-and-mortar banks often do, ranging from $5 to $15 per month.
Banks usually waive the fee if you meet one or more conditions. Common waivers include: maintaining a minimum balance (often $500 to $1,500), receiving at least one direct deposit per month, setting up automatic bill pay, or linking a savings account to your checking account. Some banks waive the fee for customers under 25 or over 65. Read the fee schedule carefully to see which waiver applies to you.
If you cannot meet the bank's conditions, switch to a bank that does not charge a monthly fee. Credit unions, online banks, and some regional banks offer free checking with no strings attached. You lose nothing by moving your account, and you save $60 to $180 per year.
Overdraft fees and other charges beyond the monthly fee
Even if your checking account has no monthly maintenance fee, other charges can appear on your statement. An overdraft fee is charged when you spend more money than you have in the account. Most banks charge $25 to $35 per overdraft, and you can incur multiple fees in a single day if you make several purchases that overdraw the account.
Other common fees include: ATM fees if you use an ATM outside your bank's network (usually $2 to $3 per transaction), paper statement fees if you request printed statements instead of online statements ($1 to $2 per month), wire transfer fees ($15 to $30), and stop payment fees if you ask the bank to block a check ($25 to $35).
Many of these fees are optional. You can avoid overdraft fees by setting up low-balance alerts or linking a savings account for overdraft protection. You can avoid ATM fees by using your bank's ATM network or choosing a bank that reimburses out-of-network ATM fees. You can avoid paper statement fees by using online statements. Read your fee schedule and turn off services you do not need.
How to compare checking accounts by total cost
Do not compare accounts based on the monthly fee alone. Calculate your total annual cost by adding the monthly fee, any fees you are likely to incur, and any interest you might earn on your balance.
For example: Bank A charges $10 per month with no minimum balance requirement. Bank B charges $0 per month but charges $3 for each out-of-network ATM transaction. If you use out-of-network ATMs four times per month, Bank B costs you $144 per year ($3 × 4 × 12), while Bank A costs you $120 per year ($10 × 12). Bank A is cheaper in this scenario, even though it has a monthly fee.
Some banks also pay interest on checking account balances—usually a very small amount, but it adds up over time. A high-yield checking account might pay 4% to 5% annual interest if you meet conditions like receiving direct deposit or making a certain number of debit card transactions per month. The interest can offset or exceed the monthly fee. Compare the interest rate, the conditions to earn it, and the monthly fee together.
Credit unions versus banks: fee differences
Credit unions typically charge lower fees than banks. Many credit unions offer free checking with no monthly fee, no minimum balance, and no conditions. Credit unions also tend to charge lower overdraft fees ($15 to $25 instead of $25 to $35) and reimburse out-of-network ATM fees, which banks rarely do.
The trade-off is that credit unions have smaller ATM networks than banks. If you need to withdraw cash frequently, you may pay more in ATM fees at a credit union than at a large bank—unless the credit union reimburses those fees. Check the credit union's ATM network and fee reimbursement policy before you join.
To join a credit union, you must meet a membership requirement, such as living in a certain area, working for a specific employer, or belonging to an organization. Many credit unions have expanded their membership criteria in recent years, so you may be able to join even if you do not meet the original requirement. Search for credit unions in your area on the CO-OP Network website or call 1-888-CO-OPNET to find one you can join.
What to do if your bank starts charging a new fee
Banks sometimes add new fees or raise existing fees. Federal law requires banks to notify you in writing at least 30 days before the change takes effect. The notice may arrive by mail, email, or through your online banking portal. Read it carefully and note the effective date.
You have options. You can accept the new fee and keep your account open. You can switch to a different bank before the fee takes effect. You can call the bank and ask if they will waive the fee for you—some banks will, especially if you have been a customer for a long time or maintain a high balance. You can also ask if the bank offers a different account type with no fee.
If you decide to switch banks, you do not need to close your old account immediately. Open a new account at the new bank, set up direct deposit and automatic bill pay at the new account, and let the old account sit for a month or two to catch any stray payments. Then close it. This prevents you from missing payments or bouncing checks during the transition.
Online banks versus traditional banks: fee structures
Online banks almost always charge no monthly maintenance fee. They have lower overhead costs than brick-and-mortar banks because they do not operate physical branches, so they pass those savings on to customers. Most online banks also do not charge overdraft fees, ATM fees, or paper statement fees.
The downside is that online banks have no physical branch where you can deposit cash or speak to a person in person. If you need to deposit cash frequently or prefer face-to-face banking, an online bank may not work for you. If you rarely deposit cash and are comfortable with online banking, an online bank can save you hundreds of dollars per year in fees.
Some online banks are subsidiaries of larger banks and have access to the parent bank's ATM network. Others partner with ATM networks like Allpoint or MoneyPass to offer free withdrawals at thousands of ATMs nationwide. Check the online bank's ATM network before you open an account to make sure you have convenient access to cash.
Frequently Asked Questions
Can a bank charge me a fee without telling me first?
No. Federal law requires banks to notify you in writing at least 30 days before charging a new fee or raising an existing fee. The notice must explain the fee, when it takes effect, and how to avoid it. If a fee appears on your statement without notice, contact the bank and ask them to remove it.
What is the difference between a monthly fee and an overdraft fee?
A monthly maintenance fee is charged just for having the account open, regardless of how you use it. An overdraft fee is charged only when you spend more money than you have in the account. You can have both fees on the same statement if you overdraw your account during a month when the maintenance fee is charged.
Do I have to pay overdraft fees?
You can avoid overdraft fees by keeping enough money in your account to cover your spending. You can also ask your bank to turn off overdraft protection, which prevents transactions that would overdraw your account from going through. Without overdraft protection, your debit card will be declined instead of charging you a fee.
Are there checking accounts with no fees at all?
Yes. Many online banks, credit unions, and some regional banks offer free checking with no monthly fee, no minimum balance, and no overdraft fees. Search online for "free checking account" or visit your local credit union to see what options are available in your area.
Can I negotiate my bank's fees?
Sometimes. If you have been a customer for a long time, maintain a high balance, or have multiple accounts at the bank, you can call and ask the bank to waive or reduce your fees. The worst they can say is no. If they refuse, you can switch to a different bank that charges lower fees.