Go Online
An online bank is an excellent choice if you’re just getting started, or if you tend to keep a small account balance. Most online banks have no minimum balance requirements, which means you can avoid fees even if your account is empty. For example, both Ally Bank and Capital One offer free checking and savings accounts with no minimum balance to open an account (and no ongoing minimums either). Opening an account is easy, and you’ll likely earn more on your savings than you would get from the average bank. You can easily deposit checks with your mobile device, and when it’s time to spend the money, you can use your debit card or pay bills online for free. If you ever need something like a cashier’s check, you need to request those items well ahead of time. Your funds are in an internet account, so you can’t just walk into a branch and get it done instantly. You can sometimes order a check from your online bank (and wait for it to come in the mail), transfer that money to a local brick-and-mortar bank, or get enough cash to buy a money order locally. For small cash withdrawals, any ATM will do the trick—but all banks have daily withdrawal limits, so remember to plan ahead for withdrawals that may exceed the limit.
Go Small
Small banks and credit unions are another good option for free checking and savings accounts. These institutions are less likely than megabanks to have minimum balance requirements and high monthly fees. Look around locally for small financial institutions. Ask friends, family, and co-workers who they bank with, and pay attention to local advertisements and banks or credit unions nearby. Your employer might even have a relationship with a local credit union, which would further improve your chances of banking for free. A credit union is an alternative to banks that requires certain criteria for membership.
Dodge the Fees
Even if you use a megabank (a national brand with branches on every busy corner), you might not have to pay fees—or even keep a large balance in your account. Banks typically offer several ways to avoid paying monthly fees, and you might qualify for a fee waiver even if you think your balance is too low. Talk with a banker or search for details on any criteria that will help you bank for free. Usually, the bank applies waivers automatically—you don’t need to notify the bank or request a waiver. Here are some ways to get fee waivers:
Set up direct deposit: Your employer can put your paycheck directly into your checking account (some banks require a minimum monthly deposit, such as $500). If you have multiple accounts, ask your employer if it’s possible to spread your direct deposits among those accounts.Use your account regularly: Some banks waive fees, for example, if you use your debit card at least 10 times per month.Parlay your student status: Show proof of enrollment and your fees can be waived for the next several years.Ask about options: Find out if there’s an online-only or paperless option at your existing bank. If you’re not using the branch anyway, you can save money (and still have the option to visit a teller—for a modest fee—if the need arises).
Alternative: Try Prepaid
If you can’t find a way to avoid paying monthly maintenance fees to your bank, explore prepaid debit cards. Instead of depositing funds into your bank account, you “load” funds onto your card. You can spend from your balance just like with any other debit card, and some cards offer online bill payment and other features. Be careful about using a prepaid card as a substitute for a bank account. Balances might not be FDIC insured, and those cards have a history of charging high fees. Plus, you don’t earn interest on your savings, so it’s a little bit harder to make progress toward your goals. However, there are several affordable cards to choose from if a bank account just won’t work for you.
