The large banks have started charging (or have increased) monthly fees for checking accounts and debit cards. They are begging to lose your business. I’ll highlight some banks and other alternatives that you can switch to in order to avoid the fees, but first I wanted to give a recap of why this is happening.
Bank of America ($5 monthly debit card fee) and CitiBank ($15 or $20 monthly checking account fee) started adding new fees to help replace billions of lost revenue that resulted from an amendment to the Wall Street Reform & Consumer Protection Act that cuts debit card swipe fees by the banks 44 cents to 23.9 cents on an average transaction. This change, lobbied by merchants, was intended to lower the costs for merchants and ideally consumers.
The other, unspoken agenda in adding these fees is that these banks are hoping that those who use their debit cards will simply switch to a credit card, which will be more profitable for the bank if these customers end up paying interest on their debt.
Is this the start of a bigger fee-happy trend? Absolutely. Banks will look to increase their fees to replace the lost revenue, estimated to be around $1.3 billion per month. They threatened Congress prior to the passage of the legislation that they would retaliate by increasing fees and they have delivered.
Did you expect anything less? These greedy banks still get 23.9 cents per swipe, ATM fees, and the needed liquidity that you allowing them to hold your cash provides. And now they want to charge you to use your own money so that their executives can maintain the same ridiculous bonuses? NO WAY!
So where can you take your business?
You can protest by taking your business elsewhere. In the process, you might start wondering why you haven’t done so earlier. Reader, Sandi, writes to me in response to that post:
It’s for that reason that I plan on leaving Bank of America before the end of this year. The $5/mo debit card fee is the last straw. I’m looking into alternative banking options and am strongly considering Charles Schwab. What do you know about their checking accounts and do you recommend any others. I’ve been spoiled by Bank of America’s online bill pay, and most other banks aren’t as good. I’d love your input.
Awesome to see readers standing up for themselves. Fortunately, there are still plenty of alternatives out there for free checking accounts and debit cards. Offers with credit unions can vary, but the 3 banks that made the list all offer:
- free debit cards
- free checking accounts
- no minimum balance to avoid fees
- free online banking & bill pay
1. USAA
USAA offers financial services to active members of the military, veterans, or their family members (here is a list of parties that can become a USAA member). USAA’s free checking account offers:
- Monthly Account Fee: $0
- Debit Card Fee: $0
- Opening Deposit: $25 deposit to open
- Checks: free checks
- ATM Fees: no charge at 60,000 USAA preferred ATM’s.
- Interest: you earn interest on your balance if over $1,000.
- Cashback Rewards on Debit Card: n/a
2. Capital One 360
Capital One 360 Checking account offers:
- Monthly Account Fee: $0
- Debit Card Fee: $0
- Opening Deposit: $0 to open or keep open
- Checks: free checks
- ATM Fees: No fees at 39,000 Capital One and Allpoint ATM’s.
- Interest: you earn interest on your balance.
- Cashback Rewards on Debit Card: n/a
3. Ally Bank
I’m a big fan of Ally Bank because they don’t do business like other large, national banks. They create appealing products that don’t take advantage of their customers. Ally Bank Interest Checking offers:
- Monthly Account Fee: $0
- Debit Card Fee: $0
- Opening Deposit: $0 deposit to open
- Checks: free checks
- ATM Fees: Use any Allpoint ATM in the U.S. for free, plus they’ll reimburse up to $10 per statement cycle for fees charged at other ATMs nationwide.
- Interest: you earn interest on your balance.
- Cashback Rewards on Debit Card: n/a
Don’t Forget Credit Unions
U.S. credit unions are not-for-profit, cooperative, tax-exempt organizations. As decisions are not driven for profit and shareholders, credit unions typically offer members lower interest rates on their loans than banks while paying out higher interest rates on savings products. They also tend to have lower fees on their products. This is not always the case, but can often be. This usually includes free debit cards and free checking accounts.
To find credit unions in your area, do a Google Maps search for “credit union” or do a Google search for your state’s credit union league.
Related Posts:
Um… you forgot PNC Bank
This isn’t meant to be an exhaustive list of every free checking account and debit card, rather a highlight a few of the better alternatives out there. Please feel free to share what PNC’s offer is if you think it’s as good or better than what I’ve highlighted. Thanks.
I love Charles Schwab and it’s what I use. Checking earns a small percetage interest and I’ve never had a problem with bill pay features.
It’s also nice to have all my brokerage, savings & checking in one spot!
I haven’t looked into Schwab yet. Is checking/debit cards 100% free? How is their ATM network and surcharge policy?
I’ve used Schwab checking for a few years now. All ATM fees worldwide are refunded. Checks are free (unlimited). No monthly account fees, no minimum balance, no debit card fees. They have an easy to use app that allows you to deposit checks using your phone. The interest rate doesn’t really qualify as “high-interest checking” anymore (0.2%), but the other features and the excellent customer service I’ve received has made it worth it for me to stay with them.
Yes, and EVERY TIME I call, I get a real human person within a minute! Can’t beat that.
This sounds like something I could use,.. do they have certain ATM’s? or can any cash point be used? You said you can’t deposit cash… But im sure you can withdrawal money..?
I switched from Bank of America to Capital One because of their premier rewards checking. I avoid fees as long as i have $1000 in direct deposit each month and their reward miles add up and can be used in addition to my normal Capital One Credit card rewards.
PNC Bank is still free (unless I’m about to get a nasty surprise)…. Actually, this bank has been pretty decent I must say.
G.E. – You have n/a listed for cashback under ally, are you not familiar with ally perks? It is cashback at specific locations and it’s not just online only most of the time.
USAA is a great all-in-one bank. Can’t beat the customer service either. I have zero complaints with them.
-Dave
Agreed. I recently switched from Suntrust to USAA. I couldn’t be more impressed with the customer service and financail advice they provide. They also offer 50 free trades when you open up an investment account.
I haven’t heard anything about Chase charging fees? Anyone?
Looking into online banks now because Citi wants to charge its customers $15/month for accounts less than $6000 in average balance. I have a real problem with the principle of it. That’s 3% a year of your own money just to have access to it!
I’m unfamiliar with online banking…how do you deposit cash? is that not an option? Do all online banks accepts checks via some form or fashion?
Credit Unions seem out of the question for me. Just googling ones in the local area bring up websites reminiscent of those back when it was called the World Wide Web.
I use a combination of Chase and Ally for my banking needs. I like to have one local bank account. I don’t pay any fees for my Chase account and I have been generally happy with the service provided. I believe there is some restriction on use of your account to not pay fees. I’m not sure the exact details, but it’s something like a single direct deposit of $500 or more per month or over $1000 in pos purchases. I’ve never had an issue with meeting the requirements for free checking. It’s worth looking into if you want a large, recognizable bank with local branches. They process ACH transactions in 3 days or less (which is important to me), and deposits are available next business day.
Thanks. I like the idea of having a brick/mortar with a national presence. I just wonder if Chase will eventually jump on the bandwagon too.
Thanks for sharing your good & bad experiences, guys & gals.
Walk into just about any bank, and look at the rate that they pay when you put your money in a CD. Then look at what the same bank will charge you to borrow that same money with a credit card. The spread is unreal. The whole banking system is out of kilter.
I don’t understand why people use a debit card over a credit card anyway. If it’s a problem with spending then use cash or prepaid cards. Otherwise, credit cards offer better protection, perks, etc.
I don’t like debit cards as I don’t like any 3rd party pulling directly from my personal account. With debit card fraud; there is no buffer and you instantly lose money.. Who knows when the bank is going to get it back or refund you.
With credit cards; if there is fraud then it’s the credit card company that is out the money and not you personally.
If you dont use your debit card with pin number and use it as credit (when asked debit or credit) it will offer you all of the same protection as a credit card
George P Burdell: I use debit cards because I don’t qualify for credit cards. I do use American Express and two Visa cards. I don’t usually use cash because I loose it. Some fell out of my pocket and desk the other day. I can’t easily replace cash. At the restaurants I use cash so that a waiter can’t skim my American Express card.
I like PNC bank. They offer a free checking account. They also have many branches and ATMs in Pennsylvania. Some of the local banks offer free checking accounts and surcharge free ATMs via the Moneypass ATM network.
Zion Bank in Utah and Idaho offer free checking accounts and their debit cards use the Moneypass ATM network too.
ok, bye
OK, I realize this is not meant to be an all-inclusive list, but a few things are worth mentioning. First, the online banking sector has become hot in recent years. There are different reasons for this, and its not only that they don’t have expensive brick & mortar branches, even though many naively believe that’s the biggest reason.
In the 1990’s, internet banking was still a new concept, but consumers eventually embraced it. But in the years that followed, online banking became just another bank access channel, rather than something that radically altered how we do banking, unlike the music business, for example. That is until more recently. In 1999, Congress changed regulations which prohibited commercial banks from participating in the investment banking business, and vice versa. That also enabled big insurance companies to enter the retail banking industry. That opened the door for a brand new wave of well-capitalized new participants to enter the retail banking business.
Most fall into a few major categories: standalone credit card issuers (which are not part of larger banks, such as American Express and Discover), insurance companies (including State Farm and Nationwide), brokerage companies (those which are not part of larger bank holding companies, so TD Ameritrade or Merrill Lynch are NOT listed, but eTrade, Scottrade and Charles Schwab definitely ARE), or other big financial entities (like Ally, CIT or TIAA-CREF).
Some online banks worth considering are as follows:
Online Banks Worth Looking Into:
1. Ally Bank https://www.ally.com/
2. American Express Bank fsb https://personalsavings.americanexpress.com/
3. Barclays US https://www.banking.barclaysus.com/
4. Charles Schwab Bank
http://www.schwab.com/public/schwab/banking_lending
5. CIT Bank https://www.bankoncit.com/
6. Discover Bank https://www.discover.com/online-banking/
7. eTrade Bank https://us.etrade.com/bank
8. GS Bank https://www.gsbank.com/
9. Mutual of Omaha Bank http://www.mutualofomahabank.com/
10. Nationwide Bank https://www.nationwide.com/online-banking.jsp
11. Sallie Mae Bank https://www.salliemae.com/banking/
12. Scottrade Bank https://www.scottrade.com/online-banking.html
13. State Farm Bank https://www.statefarm.com/finances/banking/
14. Synchrony Bank https://www.synchronybank.com/banking/
15. TIAA Direct Bank https://www.tiaadirect.com/public/banking
Note that EverBank has been acquired by TIAA Cref, although it has not been integrated into TIAA’s online banking portal yet. Also, note that some banks offer savings accounts, some offer checking accounts, some offer both. Note that some offer free ATM networks with such providers as AllPoint, while others offer ATM fee reimbursements. Finally, check on things like availability of funds policies, as online banks may differ, and may differentiate between ACH transfers from other banks, electronic check deposits, and mailed-in deposits, all things worth considering.
Bank of America is worse No good on this time don’t let people go shop using debit card denied money and give last chance having temporary card. If one more call bank of America fraud again want to kick us out wont never let us come back to stay in bank of America. They want to kicked us out and wont let people come back stay in bank of America if people like bank of America the most. And wont let you use debit card to shop anymore. Always want us to use cash
I don’t deal with bank of America. I don’t really think so bank of America is a good bank. Bank of America is a worse bank forever in the whole world. Not a lots of people does really like bank of America. Bank of America has no bussines. Some a lots of people don’t trust bank of America at all