The point is: Banks should be paying you.
Yeah, that’s right. You’re giving them your money, why shouldn’t they pay you?
But ideology aside, in reality banks usually want you to pay them for the right to give them your money. In my humble opinion – there’s no rational reason to allow them doing that.
How to avoid bank fees:
Most bank offer free checking under some conditions. Unfortunately, the Washington Mutual bank is now resting in peace, and the bank that acquired the WaMu, Chase, decided to discontinue the ultimate “Free Checking” account for new customers. So, if you opened the free checking account at WaMu – you’re off the hook unless you close it. Chase are commited to the “forever” promise WaMu made. Be careful though, if you leave your account dormant (without customer-initiated transactions) for more than half a year, Chase will change your account from free to very expensive ($12 a month or so).
For those of you who didn’t take the advantage of the WaMu account, there are many options at almost any bank, just pay attention to the conditions. The conditions usually are (one or combined, depends on a bank):
1. Online banking (Bank Of America waives monthly maintenance fee if the checking account is opened online).
2. Total balance on the account should be above some amount (almost any bank. Citi, for example, require $1500 balance).
3. Direct deposits to your account, and/or bill-pay transactions (Chase, for example, provide free checking if there’s at least one direct deposit a month).
4. Certain amount of debit card purchase transactions (5-10 a month, depends on the bank. Chase require 5, for example).
5. Account combinations (for example keeping checking account at the same bank which gave you the mortgage, or trading and savings accounts together with checking, like in Wells Fargo).
6. Recurring deposits to the savings account (Wells Fargo, for example, offers free checking if you deposit monthly at least $25 to the savings account. Don’t have to keep the money there).
Sometimes the requirements can be interchanged. In Chase, for example, the account will be free if either rule 3 or 4 are met, so if you suddenly loose income for a month, just pay for the milk with the debit card and you’re good to go.
So among the conventional national banks – currently the best option seems to be the Bank Of America “MyAccess® Checking Account”, which is unconditionally free, once opened online.
What about non-conventional?
Several options there:
1. Online banks – for example, ING Direct, which offers online checking account not only free of fees, but also with interest on the balance (and not a bad interest too, currently – starts with 0.24%, which is better than many conventional savings accounts). Not only that, but there also some perks like a wide ATM network, which can save some $$ if you’re stuck in the middle of nowhere far away from the closest branch of any bank.
2. Credit Unions – many of them have membership fees, but others – don’t, and provide free checking and wide ATM network that the CU’s share. Check out your neighborhood credit union to see what it has to offer.
3. Trading accounts which can be used for checking needs – for example, E*Trade allows you to write checks and deposit and withdraw money through the EFT system from your trading account.
To summarize – like everything, banking is a product, and you should shop around and see where you get the best product for your money. It’s worth shopping around, all the info is on the internet, so its a no hussle, but the benefit can be significant.
So, enjoy your banking.
Your Little Advisor.