Could Free Checking Be Coming to an End? How to Keep Your Account Free
You need a checking account to pay bills, deposit your paychecks, and hold funds securely until they’re ready to spend them. But what you don’t need are the high fees.
Free checking accounts solve the problem of excessive fees, but some big banks are having second thoughts about offering them. While free checking options likely won’t disappear overnight, it’s possible that there may be fewer options to choose from in the future.
New Regulations Threaten Free Checking Accounts
Chase, one of the largest banks in the U.S., announced in July 2024 that it would consider charging existing customers fees for checking accounts in response to a federal plan to cap overdraft fees. Customers who bank with Chase are already subject to monthly maintenance fees for checking accounts unless certain requirements are met.
Those same customers may also be charged overdraft fees of up to $34 per transaction. Overdraft fees are major money-makers for banks, but that might soon change. The Consumer Financial Protection Bureau (CFPB) has proposed new regulations that would cap overdraft fees.
The final number hasn’t been decided yet, but the CFPB has proposed a range of numbers from $3 to $14, a steep drop from the typical overdraft fee of around $35 per transaction. A cap on overdraft fees could save consumers big—but cost banks billions in lost revenue.
Chase has not clarified what its new checking account fee structure would look like and whether it would raise existing monthly maintenance fees or impose new fees separately. Should the CFPB finalize its proposed overdraft fee rule, it would likely take effect sometime in 2025.
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What New Banking Fees Could Mean for Consumers
Should Chase decide to follow through on its plan to charge for checking accounts, other banks could follow. It’s difficult to say how many banks would impose fees, as free checking could help draw customers away from competitors. But it’s something to have on your radar if you’re worried about a fee hike at your bank.
Even a small fee increase monthly can add up over time and drain funds away from your checking account, or other accounts you have at your bank. If you’re already paying a $5 or $10 fee, any changes could make your bank account significantly more expensive.
Would you potentially save money on overdraft fees, even though you’re paying other checking account fees? Yes, if you sometimes overdraft your account. However, if you’re a stickler about maintaining a positive balance in checking at all times, you’d likely see no benefit from a cap on overdraft fees.
What Can You Do If Your Bank Starts Charging You?
If your bank decides to impose a monthly maintenance fee just to keep your account open, you’ve got some options when it comes to what you do next. Here are some ideas for how to handle rising bank fees.
1. Switch to a Bank With No Fees
Changing banks could be the simplest way to avoid a monthly maintenance fee (and other fees) if you’re willing to make the switch.
If you’re considering a switch, your options include:
- Other big banks
- Regional banks
- Community banks
- Credit unions
Credit unions can be fee-friendly and offer other benefits, like lower interest rates on loans or better rates on savings deposits. You’ll typically need to meet membership requirements to join a credit union, though some credit unions extend membership to anyone nationwide.
If you’re thinking of switching banks, look at the full fee schedule, not just the monthly maintenance fee. A bank may not charge a monthly fee, but they could make up for it with higher fees for other products or services.
2. Meet Minimum Balance Requirements (or Other Requirements)
If you’d rather not go to the trouble of moving your checking account to a different bank, you can look for ways to waive monthly fees at your current bank. Your bank might offer several options for avoiding a monthly maintenance fee, including:
- Maintaining a minimum average daily balance in your checking account
- Maintaining a minimum average daily combined balance across all your accounts with the same bank
It may be easier to try to waive banking fees versus switching banks if you have multiple accounts at your current bank or you’ve been a loyal customer and are happy with the service you receive overall.
3. Set Up Direct Deposit
Direct deposit allows you to deposit some or all of your paychecks into your checking account automatically. Your bank may offer direct deposit so you can get paid up to two days early, with no fee for this service.
If your bank offers direct deposit, it may be worth enrolling to avoid a monthly fee. However, you might need to meet a minimum deposit requirement each month. For example, you may need direct deposits of $500 or $1,000 per month to waive the maintenance fee.
Pro tip: Remember to update your direct deposit information if you change jobs or move your accounts to a different bank.
4. Downgrade Your Account
Downgrading your checking account is another way to potentially avoid a monthly fee. Banks can offer a range of checking accounts, with premium accounts at the top and basic checking at the bottom. The higher you are on the ladder, the more features you might have access to, but the fee is likely to be higher as well.
If you have a premium checking account but don’t use all the included features or benefits, it could make sense to downgrade to a lower-tier standard account. You might be able to reduce the monthly maintenance fee or avoid it altogether without having to switch banks.
5. Use Debit Card Frequently
Some banks waive monthly maintenance fees when you complete a certain number of debit card transactions each month. For instance, you might be able to avoid a fee if you use your card 10 times in a month.
Be sure to read the rules so you understand which debit card transactions count. Some banks may specify that qualifying transactions must be purchases, while other banks may count ATM withdrawals or bill payments toward your monthly total.
6. Opt for Online-Only Banks
Checking accounts at online banks can be found that charge no monthly maintenance fees and waive other fees, such as overdraft and wire transfer fees. Moving to an online bank could be worth it if you’d like to pay as little in fees as possible while potentially enjoying higher interest rates on savings accounts.
The trade-off associated with moving to an online bank is giving up access to branch banking. Online banks, for the most part, don’t have physical branches so you’re limited to managing your accounts through online and mobile banking or at ATMs.
That could make it harder to deposit cash, though some online banks do allow cash deposits at ATMs and other partner locations. Whether a lack of branches is a dealbreaker for you can depend on how you prefer to manage your accounts.
Here are some things to keep in mind as you compare online banks.
- What fees does the bank charge for checking accounts?
- Is there a minimum balance requirement?
- How much money will you need to open the account?
- How will you be able to access your accounts?
- Does the bank allow for ACH transfers, mobile check deposits, or wire transfers?
- Can you deposit cash?
- How large is the bank’s ATM network?
- How easy is it to get in touch with customer service if you need help?
- What do you need to open your account online?
If your bank decides to increase its fees, you should receive a written notice detailing what’s changing and when the changes take effect. That should give you time to decide whether you’d like to take your money elsewhere.
Should You Be Worried About Checking Account Fees?
Nothing is set in stone regarding the CFPB’s overdraft fee cap, and it’s possible the proposed rule may not be finalized.
However, it’s worth keeping an eye on what big banks like Chase are saying about the potential for increased fees, as that could have a direct impact on your bottom line.
Just remember that if your bank does decide to implement a fee hike, you’re not necessarily stuck with it, and there are things you can do to avoid it.
