7 smart moves to get great checking

by Craig Guillot on April 22, 2013

A good checking account should be cheap and easy to use.

It should free (or near-free), have no minimum balance requirement and not make you jump through hoops to access your money.

A recent survey by the U.S Public Interest Research Group found while only 24% of big banks offer free checking, 60% of small banks and credit unions continue to do so.

Wherever you go, follow our 7 smart moves to get a good checking account:

Smart move 1. Avoid these fees.

Try to avoid signing up for any account that imposes:

Monthly maintenance fees. These will eat your account balance alive if you're not careful. Some of the bigger banks have been raising their fees in recent years. The MyAccess Checking account at Bank of America has a whopping $12 monthly maintenance fee if you don't maintain a $1,500 minimum balance. That's $144 per year simply to keep your money in the bank.

Per-check fees. Fewer banks charge a fee per check, but some are limiting you to a set number per statement cycle. Ideally you'd want unlimited check writing, but with electronic payments now the norm, you're not likely to go over the standard limit of 30 anyway.

Starter check fee. Any bank that charges you for the blank starter checks that tide you over until your personalized checks come doesn't deserve your business.

Fees for paper statements. If getting a monthly statement in the mail is important to you, you shouldn't have to pay extra for it.

Check image fee. Some big banks will charge you $3 per month to receive images of your cancelled checks with your statement.

Smart move 2. Avoid checking accounts with a minimum balance requirement.

"Free checking" shouldn't be dependent on keeping $10,000, $1,000 or even $100 in your account -- or a combination of accounts. You want a checking account that imposes no monthly fees, even if your balance is $1.

The reality is that these accounts are less common.

If you can't find an account that doesn't require a minimum balance, the next best option is to find a bank that will let you link your savings account to meet the minimum balance requirement.

Smart move 3: Get free use of any ATM.

When you use a debit card at another bank's ATM, you can be charged a fee by both your bank and the other bank. Those fees averaged more than $4 in 2012 and increase every year.

If you make two ATM transactions per week at that rate, that's more than $32 per month, or nearly $400 per year.

The most consumer-friendly checking accounts impose no fees for using another bank's ATM and reimburse you for the fees other banks impose on you. In other words, you get to use pretty much any ATM for free.

The next best deal is where your bank imposes no fees for using a so-called "foreign ATM," but won't reimburse you for the fees the owner of that machine might charge you.

Think about how you use your money and how often you visit ATMs. Smaller banks offer lower fees but they typically have fewer ATMs around.

Smart move 4. Forget about earning interest.

With interest rates so pathetically low these days, it shouldn't really even factor into your decision when picking a checking account.

The average interest-bearing checking account pays 0.05% APY or less.

If you're like most people, you may only keep an average balance of $2,000 in your checking account. Maybe even less.

You're literally talking about earning pennies a month.

Be wary of any bank customer service reps that urges you to "move up" to an interest-bearing account. It probably comes with more fees and is just a bigger money-maker for the bank.

Smart move 5. Don't opt into overdraft protection.

Banks used to automatically enroll checking account customers for "overdraft protection."

That allowed them to unwittingly overdraw their account with debit cards, incurring a $30 fee for every purchase they made.

The Federal Reserve finally stepped in and told banks that customers had to actually sign-up for such programs and all of their fees.

Don't succumb to the scare tactics banks use to push overdraft protection onto their customers.

You'll likely be asked to sign up when you open the account. You may later be asked again via a phone call, email or letter in the mail.

Just say no.

Overdraft protection may sound good on the surface but it can bury you in fees. An average overdraft fee is now more than $31.

It's best to keep an eye on your balance in the first place.

And if you do reach your limit, it's better to be denied the purchase than to end up being hit with $30 in fees for a $7 lunch.

Smart move 6. Ensure transactions are fairly processed.

Banks and credit unions use several systems for processing checks and debit card transactions.

The worst way is to pay the day's biggest checks and debit card transactions first. If they overdraw your account, the bank can bounce all smaller transactions, charging an insufficient funds fee for each of them.

A number of banks, including Citibank and Wells Fargo, have stopped this practice and are now processing the fair way -- from smallest to largest.

Look for a checking account agreement that says, "Items presented for payment on the same day will be paid in amount order, smallest to largest," not "We reserve the right to honor checks in any order we may choose."

An acceptable although less desirable alternative is a bank that processes transactions in chronological order.

Smart move 7. Shop around for the best deal.

You don't have to run all over town to compare fees and minimum balance requirements.

Our database of checking accounts has that information for banks in your area and Internet banks.

Then call a local credit union.

These member-owned cooperatives usually have great checking accounts and are particularly helpful to low-and-middle-income families or 20-somethings just starting out in life.

One thing to keep in mind: While many credit unions and small banks offer free accounts, few can provide the digital services that the big guys offer.

So if you need more bells and whistles, you may have to swallow some fees.

Big banks like Chase, Capital One and Bank of America have customized banking apps that allow for complete mobile banking.

You'll be able to check balances, transfer funds, make payments and even deposit checks from your smart phone.

You'll also get automatic bill pay, more bricks-and-mortar locations all over the country and more ATMs.

While smaller banks are catching up in technology, they still lag behind the big guys. Some small banks and credit unions barely have functioning websites.

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