This is a guest contribution from Bill Hazelton, CEO of Credit Card Assist where he provides tips, news and advice on credit cards, balance transfers, rewards programs and all things credit-related.
While it’s not yet officially the end of free checking, consumers are finding it harder and harder to find banks that will waive fees on checking accounts. San Francisco-based banking giant Wells Fargo eliminated free checking accounts on all new customers effective as of July 1, 2010. They did grandfather-in existing customers to continue to receive free checking services on those older accounts, but all new accounts no longer enjoy fee-free checking. Many other banks have followed suit, instituting monthly service fees and even charging customers for new checkbooks and raising rates for bounced and canceled checks.
As a customer, what do you do? Checking accounts still offer a great deal of convenience and are necessary for many people, yet rising fees and service charges can take a significant bite out of your budget.
The good news is that most banks still offer ways to back into a free checking account, usually in the form of waived fees, so long as certain conditions are met. While monthly checking account fees and the terms and conditions under which they can be waived vary from bank to bank, here are some of the strategies you may be able to use in order to avoid the bite of those service charges:
- Maintain a minimum balance. Some financial institutions will waive checking fees if you keep a minimum balance in your account every month. However, you need to be sure you watch carefully if your balance approaches this limit, as you may get dinged if you dip below it before the date on which monthly fees and service charges are levied.
- Purchase other financial products from the bank. In the case of Wells Fargo, the bank continued to offer free checking to customers who had a mortgage with their bank. You might also qualify for waived checking fees if you open investment accounts or purchase investment products from a particular bank.
- Go for direct deposit. Because having your paychecks directly deposited into your checking account eliminates the need for you to queue up in the teller line (and cost the banks money paying those pesky bank tellers), some banks will not charge you monthly checking fees if you utilize direct deposit services. Talk to your employer about the possibility of going electronic with a direct deposit of your paycheck rather than cash a physical check each pay period.
- Meet minimum monthly transactions targets. Some banks will cancel your checking account fees if you make a minimum number of monthly transactions, typically in the range of about 10 to 15 a month. Examples of transactions that would qualify include cash withdrawals, debit card payments for products or services, bill payments, credit card payments, deposits and so forth. However, you will want to be careful in this case, as some banks will charge you for each transaction beyond a prescribed upper limit.
You can also investigate alternative financial institutions as a means of cutting back on service charges and fees. Credit unions are specialized financial institutions that are both owned and controlled by its customers, also known to the institution as “members.” While you will have to qualify to join a credit union, many of them are location-based so might be able to qualify on the basis of being a resident of a particular municipality or county, for example. You’re likely to find that credit union interest rates are as low or lower than those offered by regular banks. In fact, you just might be able to get free checking as well as advantageous interest rates on major purchases like car loans and mortgages. Best of all, many credit unions do not require members to maintain minimum balances, directly deposit paychecks, meet a minimum number of monthly transactions or purchase other financial products in order to qualify for that free checking.