There are several benefits of opening a free online checking account, including the opportunity to save more money, higher interest rates and fewer fees. Many of these accounts also allow for a negative balance fee in certain situations, such as when you make too many transactions and end up with a negative balance. These perks are important considerations, so be sure to read through them before opening an account. Here are the pros and cons of each. Before opening an account, make sure to find out what your bank’s requirements are.
Interest rates are higher than traditional checking accounts
While the average savings account rate is 0.06 percent, the interest rates that are offered by online banks are considerably higher. This is particularly true for those that offer perks like ATM reimbursements and discounted mortgage rates. In addition to the interest rates, online accounts usually allow you to perform transactions like automatic bill payment, one-time bill payments, and transfers between accounts. The benefits of these accounts are numerous and the main differences between them are the convenience and fees.
High-interest checking accounts may offer higher interest rates than traditional checking accounts, but many restrictions apply. Some account types require a minimum balance, while others have no minimum balance requirements. Other features of high-interest checking accounts include minimum monthly deposits and minimum balance requirements. Keep in mind that your monthly banking activities and minimum balance requirements will determine which type of account is right for you. Here are some of the most popular options:
There are fewer fees
There are fewer fees for a free, online account than there are for a traditional one. Most big banks require you to set up automatic payments and maintain a balance of at least $5,000. Some even require you to make at least 25 debit card transactions per month. These are wrong, because the average student keeps a lower balance than a typical American does. Plus, a free online account doesn’t mean you can deposit cash anywhere you want – most banks have monthly limits on how much you can deposit.
You should also check whether there are any restrictions to using the account. Some banks charge a fee every time you request a paper statement. Others don’t require a minimum balance. Some free checking accounts allow you to sign up without an initial deposit. Make sure the account offers overdraft options. Some won’t, while others will allow you to borrow money if you overdraw your account. Ultimately, the best free checking account will be easy to use online and have a great app or mobile site.
Paperless statements are required
Changing to paperless statements is very easy. Usually, all you need to do is use the online account or the mobile app to make the switch. After that, you can edit the delivery settings. If you have chosen online-only statement delivery, you can choose to receive your statements via email. Alternatively, you can opt to receive your paper statements by regular mail. You will need a valid email address to opt for paperless statements.
There are benefits to opting for paperless statements, but not all consumers have adopted them yet. The National Consumer Law Center found that only one-third of Americans receive e-statements for free, while several other companies have reported lower numbers. However, paperless statements can cause consumers to lose vigilance about paying their bills. In addition, a high volume of e-mails can make it easy to ignore paperless notification messages. As a result, consumers should be aware of how important it is to switch over to paperless statements if they are interested in free online banking.
Overdraft protection is available
Overdraft protection is a common feature that many banks offer. It prevents overdraft fees by allowing a transaction to go through even if there is no money in the checking account. While this service is generally free, banks often charge for it. You should research how much you can expect to pay each month to stay within your overdraft protection limit. In addition, overdraft protection can be an expensive feature if you make multiple overdrafts or withdraw more money than you have available.
The benefits of overdraft protection may be worth the extra fees. Using it can allow your checks to clear and prevent returned check fees. It can also provide access to funds during emergencies. But remember that overdraft protection does not entirely eliminate overdraft fees. In fact, many banks charge for each overdraft transfer, and multiple fees can occur within a day. Overdraft protection also may discourage you from overspending.