10 min read
Pros and Cons of Free Checking Accounts
-
-
Copied link to Clipboard!
Are you considering opening an account but unsure which is the right choice? A free checking account offers advantages like easy access to your funds. However, it also has certain limitations. Let us explore the pros and cons of a checking account.
Lesson Notes:
- Free checking accounts have no monthly maintenance fees.
- Overdraft fees and minimum balance requirements may apply.
- Free checking accounts offer easy access to funds via ATMs.
- They often lack interest and have fewer premium services.
LESSON CONTENTS
Understanding Checking Accounts
A checking account is a foundational financial tool that allows you to deposit and withdraw money for daily transactions. Typically, these accounts are the central hub for managing day-to-day finances, such as paying bills, making purchases, and receiving direct deposits from employers. According to the Federal Deposit Insurance Corporation (FDIC), most American households had at least one checking account as of 2021, highlighting their significance in personal finance management (FDIC, 2023).
Pros of Free Checking Accounts
As highlighted above, checking accounts are the gateway to sound personal finances. They offer several checking account benefits crucial to managing your finances. Here are some advantages:
No Monthly Maintenance Fees
One of the primary benefits of a free checking account is the absence of monthly maintenance fees. This means you can manage your money without worrying about recurring charges diminishing your balance. A 2024 survey by Bankrate found that the average monthly fee for non-interest-bearing checking accounts was $5.47 (Bennett & Goldberg, 2024). Opting for a free account saves you this expense.
Easy Access to Funds
Free checking accounts typically offer unlimited access to your funds through various channels like ATMs, debit cards, and online banking. You can easily withdraw cash from ATMs and use your debit card to conduct everyday transactions like paying for goods and services at point-of-sale terminals.
Online and Mobile Banking
Most financial institutions (credit unions and banks) provide online and mobile banking platforms with free checking accounts. According to a 2023 American Bankers Association (ABA) survey, 81% of Americans had used a mobile device to manage their accounts at least once over the previous month (ABA, 2023). Common mobile features include mobile check deposits, real-time transaction alerts, and bill pay.
Direct Deposit and Automatic Payments
With a checking account, you can seamlessly arrange direct deposit for your paycheck and automatic bill payments. You will save time and ensure timely payments, helping avoid late fees and hence boosting your credit score. Furthermore, most checking accounts support fund transfers to other accounts or accounts in different banks.
FDIC or NCUA Insurance
The FDIC provides depositor insurance at banks. Similarly, the National Credit Union Administration (NCUA) protects deposits at all federal credit unions and most state-chartered credit unions (Mycreditunion.gov, 2023). Thus, funds in free checking accounts are insured up to $250,000 per depositor per institution by NCUA or FDIC. This insurance provides security – your money is protected.
Cons of Free Checking Accounts
While there are many benefits, as highlighted above, it's also important that you weigh the pros and cons of checking an account. Here are potential drawbacks to consider:
Low or No Interest
Most free checking accounts offer little to no interest on your balance. This means your money isn't growing over time, as it might be in a credit union savings account or investment vehicle.
Overdraft Fees
Even with a free checking account, overdraft fees can be costly. These fees occur when you spend more than your available balance. The Consumer Financial Protection Bureau (CFPB) reported that consumers paid over $5.83 billion in overdraft and non-sufficient funds fees last year (CFPB, 2024). Additionally, Bankrate notes that “nearly all accounts (94 percent) charge overdraft fees,” and the average fee has risen to $27.08 in 2024 (Bennett & Goldberg, 2024).
Minimum Balance Requirements
Some free checking accounts require a minimum balance to avoid fees or maintain account status. A balance below this threshold could result in unexpected charges.
Limited Services
Free checking accounts offer fewer perks compared to premium accounts. Benefits such as cashback rewards, higher withdrawal limits, or personalized financial advice are limited.
Out-of-Network ATM Fees
Using out-of-network ATMs can incur additional fees. Bankrate’s annual Checking Account and ATM Fee Study revealed that the average total cost of an out-of-network ATM withdrawal was $4.77 (Bankrate, 2024).
How to Choose the Right Checking Account
Selecting the best checking account involves assessing your financial needs and habits. Then, after the assessment, screen for one with the right features to fit your financial lifestyle. Here are key factors to consider:
Fee Structure
Examine the account's fee schedule, including overdraft fees, ATM fees, and any potential hidden charges. Opt for accounts with transparent and minimal fees.
Accessibility
Does the financial institution have branches in my community? This is a key question, especially if you prefer in-person banking. If you frequently withdraw cash, then prioritize the availability of ATMs.
Online and Mobile Banking Features
In today's digital world, banking should be convenient. So ensure the institution offers a user-friendly app and online platform. Additionally, confirm that the platform has features that suit your lifestyle, such as mobile check deposits, bill payments, real-time alerts, and digital wallet support.
Minimum Balance Requirements
If maintaining a high balance is challenging, choose an account without minimum balance requirements to avoid fees.
Additional Services
Look for added benefits like budgeting tools, unlimited ATM fee reimbursement, or cash back on debit purchases that align with your financial goals.
FAQs
What is a checking account, and how does it work?
A checking account is a bank or credit union account designed for frequent transactions. It allows you to deposit and withdraw money, write checks, use debit cards, and manage your finances through online and mobile banking. Funds are easily accessible for daily expenses and bills.
What are the main advantages of a free checking account?
The primary advantages include no monthly maintenance fees, easy access to funds, online and mobile banking capabilities, direct deposit, and automatic payment options. Most importantly, security through federal insurance protection up to $250,000.
Are there any disadvantages to using a free checking account?
Potential drawbacks include overdraft fees, low or no interest earnings on your balance, and minimum balance requirements. Plus, due to their basic nature, most free checking accounts have limited additional services compared to premium accounts. Also, in some banks, you incur ATM fees when using out-of-network machines.
How do I choose the best checking account for my financial needs?
Assess factors like fee structures, accessibility to ATMs and branches, digital banking features, minimum balance requirements, and additional services. Consider your financial habits and preferences and find an account that aligns with your lifestyle.
How can I open a checking account with Ent Credit Union?
You can open an account by visiting Ent Credit Union's website or a local branch. The process requires completing an application, providing necessary identification (ID and social security number) and contact information, and funding your account.
*PLEASE NOTE: This article is intended to be used for informational purposes and should not be considered financial advice. Consult a financial advisor, accountant or other financial professional to learn more about what strategies are appropriate for your situation.
Related Resources
View All
10 min read
Winning Financial Moves: How to Create a Budget & Maximize Every Dollar
A budget is simply a written plan for your money, yet only 42% of Americans keep one consistently (NFCC, 2024). When you chart where every dollar goes, three things happen: you gain clarity, you control spending before it occurs, and you feel more confident about emergencies. In short, a budget is a way to make sure you can cover your expenses from month to month — a calm antidote to paycheck panic. It creates financial stability and supports your financial goals; read on to learn how to create a budgeting plan.
10 min read
A Football Fan’s Guide to Budgeting for Game Day
Football, friends, and food are a winning trio, but without a game plan, the bill can tackle your wallet before the first snap. This guide turns tips for creating a budget-friendly game day party into an action-packed playbook so you can savor every touchdown without fumbling your finances.
10 min read
5 Rookie Money Mistakes (And How to Avoid Them)
Have you ever had an unexpected bill wipe out your good intentions, or caught yourself wondering, “What should I do with my money?” You’re not alone. Late-night searches for money advice can leave anyone confused. One blog tells you to skip the lattes, while another pushes a cryptocurrency side hustle. Instead of adding to the noise, this guide breaks down five of the most common money mistakes and, more importantly, how to sidestep them.
12 min read
How to Budget as a College Student
Every semester delivers the same double punch: a tuition bill larger than last term and a flood of incidental costs — textbooks, lab fees, late-night pizzas — that evaporate paychecks and loan disbursements at dizzying speed. The average college student spends $38,270 per year on tuition, books, supplies, and daily living expenses. In a private campus, that bill rises to $58,628 (Hanson, 2025). When numbers grow that large, hoping for the best is not a plan; a written budget is. This guide offers a practical roadmap for how to budget as a college student—from mapping cash flows, choosing tracking tools, and cutting expenses without trimming the joy out of campus life.
5 min read
How to Start Saving Money: Clever & Easy Steps
If you vowed this is the year you get ahead financially only to watch payday deposits disappear, you’re not alone. Gillespie (2025) notes that 59% of Americans still can’t cover a $1,000 emergency without borrowing or selling something. Meanwhile, the U.S. personal-saving rate is languishing below 4 percent—about half its long-term average (BEA, 2025). These sobering numbers explain why learning how to start saving is so critical. The encouraging news? A few clever ways to save money can transform vague intentions into steady progress.
6 min read
How Can I Save Money? Here Are 10 Easy Tips
How can I save money? Picture your money as water flowing through a series of channels. Some streams nourish long-term goals, others evaporate into impulse buys, and a few leak through cracks you never noticed. Redirecting enough of that flow toward the bucket that matters most — savings for emergencies and retirement — guarantees long-term security. Savings protect your future. Yet the typical American household saves just 3.9 % of disposable income as of March 2025, roughly half the pre-pandemic norm (St. Louis Fed, 2025). The good news is that small, deliberate changes can double or triple that rate without feeling like deprivation.
Below, you’ll find proven, beginner-friendly money saving strategies you can start on today. By the end, you’ll have a clear map of ways to save money, from the daily latte decision to bigger moves like automating transfers or picking a side hustle.
10 min read
Summer Vacation Ideas on a Budget
Rising airfares or tight budgets don’t have to cancel summer fun. A thoughtfully planned summer vacation on a budget can restore energy, create memories, and leave room in the checking account for next semester’s textbooks or an unexpected flat tire. Let’s nail down the numbers and map out low-cost destinations and close-to-home adventures. We also outline painless saving tricks and digital tools that track every dollar and make family summer vacation ideas on a budget a practical reality.
10 min read
How to Become Financially Independent
Financial independence (FI) isn’t a distant fantasy reserved for trust-fund heirs or Silicon Valley founders. Instead, it’s a math-driven destination you can plot on a timeline — then march toward with deliberate choices every payday. In plain terms, financial independence means having the freedom and flexibility to make choices that align with your goals - without constantly worrying about money. It’s about feeling secure and confident in your day-to-day life and your future. In the next few minutes, you’ll learn the core habits, sequential steps, and digital tools that turn that definition into reality. By the end, you won’t just understand how to become financially independent; you’ll know which actions to take.
8 min read
Can You Pay Rent with a Credit Card?
Can you pay rent with a credit card? Short answer: yes. Absolutely, but only if your landlord or a third-party processor will take the plastic and you are prepared to shoulder—or cleverly avoid—the fees. Roughly 22% of U.S. renters already put monthly housing costs on debit or credit cards, according to a 2024 payment-trends study by property-tech firm Zego (Salmonsen, 2024). That slice is growing because tenants want smoother cash flow and richer rewards, while landlords crave on-time payments. Still, every swipe passes through a maze of surcharges, interest rates, and utilization limits. Before you tap “Pay,” you need a plan to ensure you have a smart credit card management strategy in place.
10 min read
Is it Wrong to Let Someone Use Your Credit Card?
When someone you trust — a spouse, adult child, sibling, or close friend — asks to use your credit card, the request feels innocent. Maybe it’s for groceries, a plane ticket, or an emergency car repair. But even with the best intentions, lending your credit card can end up with disastrous consequences. So, you might be asking, is it wrong to let someone use my credit card?
The short answer: Yes, it can be wrong — legally, financially, and ethically — depending on the circumstances. Even if you trust the person, the risks often outweigh the convenience. Below, we unpack the hazards, the narrow circumstances when sharing your credit card can work, and safer alternatives that protect you.
8 min read
Improving Your Debt-to-Income Ratio
In Q3 2024, Americans spent 11.3% of their disposable income on household debt payments (St. Louis Fed, 2024). Still, some households suffer massive debts, using over 50% of income to service debt. When your debt payments consume too much of your monthly income, lenders view you as a riskier borrower. This results in unfavorable loan terms, higher interest rates, or loan denials.
Understanding how to improve your debt-to-income ratio helps you qualify for better financing options. In simple terms, your debt-to-income ratio (DTI) computes the percentage of your income that goes toward paying debts each month. In this article, we’ll explain how to compute your DTI ratio, what is a good debt-to-income ratio, the best debt-to-income ratio for various loans and strategies for lowering it.
10 min read
What Is Cash-Out Refinancing?
What is cash-out refinance? It is a mortgage option that lets homeowners replace their existing home loan with a new one and, in the process, convert a portion of their built-up home equity into cash. In other words, if you have substantial equity in your property, you can refinance it for a loan amount that exceeds what you currently owe. The difference between the new loan’s principal and your remaining mortgage balance is then disbursed to you as a lump sum of cash.
A cash-out refinance can be a powerful way to consolidate debt, fund home renovations, or address pressing financial needs. Moreover, mortgage refinance rates are often lower than those of credit cards or unsecured loans. So, how does a cash-out refinance work? Read on for details and the pros and cons.