Free Online Checking Account - The Pros and Cons

Free Online Checking Account

A typical banking or even online banking service is to offer free online checking account to clients. This is an important part of a decision to sign on with a bank, as a checking account that eliminates or reduces fees can help save you a significant amount of money each month. A high interest savings account is quite hard to find nowadays, and so any money that accumulates over the month is going to be small. This means that if you have a high number of transactions that come with fees, you could actually be losing money each month.

Why do banks offer free, no-charge checking? It's part of their top banking sales pitch. You are more likely to be interested in signing up with a bank that offers you something free, especially if it will reduce the service charges that most of us want to avoid. Once the bank has a client, then they can make recommendations and promote different services and money management programs that they have to offer, which is largely where the bulk of a financial institution's money is made.

But what does free online checking account actually mean? Usually, it involves maintaining a certain amount of money in a checking account. As long as the amount never dips below the assigned level, then you receive a variety of benefits. These benefits usually involve free checks, hence the name, as well as exemption from service fees from a variety of other transactions, including PC banking. Free use of an ATM debit card, free checks, unlimited transactions and other reductions in costs are typical terms that go with a free, no-charge checking account.

So what is the downside, you may ask? As mentioned, you usually need to maintain a certain amount of money in the account in order to continue to receive free, no-charge checking. If you need to dip into that account, then service charges will start popping up. Also, a checking account usually does not earn any interest, which is the tradeoff for the absence of service fees. Since a high interest savings account is a rarity these days, this may not be an issue.

If you are good at managing your money, and can afford to have a portion of your money set aside for the long term, then a free online checking account may be the best solution. This is especially true if you tend to accumulate a lot of transactions in the month. If not, then you may be better off paying as you go, but it's best to check with a bank employee about your options before making any decisions.

Free Online Checking Account