Checking Accounts Explained: How to Choose One
A checking account is the hub of your day-to-day money. This guide covers how checking accounts work, the main types, the fees to avoid, overdraft options, what to compare, how to stay safe, how to open an account and what to do if you've been turned down before.
By Pond.com editors Updated 4 min read
Quick answer
- A checking account is for everyday money, paying bills, receiving pay and using a debit card.
- Look for no monthly fee (or an easy way to waive it), a large free ATM network and good overdraft options.
- High-yield checking pays more interest but often has requirements, like a set number of debit card purchases.
- Keep savings in a separate savings account, ideally high-yield.
- Check that the bank is FDIC-insured or the credit union NCUA-insured.
Your checking account handles your paycheck, bills and everyday spending, so the wrong one can quietly cost you in fees. Choosing a good one takes only a little comparing, and most people can find an account with no monthly fee at all.
This guide is general information, not financial advice.
Checking accounts with no monthly fee, no minimum balance and no overdraft fees, compared on ATM access.
| Provider | Fee-free ATMs | Other banks' ATM fees refunded | Details |
|---|---|---|---|
| Ally Bank Spending Account, opens in a new tab Direct deposits up to 2 days early. Pays a little interest. | 75,000+ | Up to $10 per statement cycle | Direct deposits up to 2 days early. Pays a little interest. Visit site Ally Bank Spending Account, opens in a new tab |
| Capital One 360 Checking, opens in a new tab Direct deposits up to 2 days early. No foreign transaction fees. Branches and cafes in some areas. | 70,000+ | No | Direct deposits up to 2 days early. No foreign transaction fees. Branches and cafes in some areas. Visit site Capital One 360 Checking, opens in a new tab |
| Fidelity Cash Management Account, opens in a new tab A brokerage cash account, not a bank account; cash is swept to FDIC-insured program banks. No foreign transaction fees. | Any ATM | Unlimited, worldwide | A brokerage cash account, not a bank account; cash is swept to FDIC-insured program banks. No foreign transaction fees. Visit site Fidelity Cash Management Account, opens in a new tab |
| Charles Schwab Bank Investor Checking, opens in a new tab Opens with a linked Schwab One brokerage account, which has no minimum. No foreign transaction fees. | Any ATM | Unlimited, worldwide | Opens with a linked Schwab One brokerage account, which has no minimum. No foreign transaction fees. Visit site Charles Schwab Bank Investor Checking, opens in a new tab |
| SoFi Checking and Savings, opens in a new tab Direct deposits up to 2 days early. Free overdraft coverage up to $50 with $1,000 or more in monthly direct deposits. | 55,000+ | No | Direct deposits up to 2 days early. Free overdraft coverage up to $50 with $1,000 or more in monthly direct deposits. Visit site SoFi Checking and Savings, opens in a new tab |
How we chose these
We included checking accounts open to customers in every state with no monthly fee, no minimum balance and no overdraft fees, from well-known online banks and brokerages, chosen for how easy they make it to get cash without fees. Accounts are listed in alphabetical order. We check each provider's own website. Pond.com isn't paid by any provider listed here.
Every account listed has no monthly fee, no minimum balance and no overdraft fees. Other fees, such as for outgoing wires, may apply.
For information only, not a recommendation. Rates and terms change often and may depend on where you live; check the details with the provider before you apply. Pond.com isn't paid by any provider listed here.
How a checking account works
- Money comes in through direct deposit, transfers and mobile check deposits.
- Money goes out through your debit card, bill pay, transfers, payment apps and checks.
- It's insured up to $250,000 per depositor, per institution, per ownership category at FDIC-insured banks and NCUA-insured credit unions.
- Deposits may be held for a day or more before you can use all of the money, especially large checks.
Types of checking accounts
| Type | Good for | Watch for |
|---|---|---|
| Basic or free checking | Most people | Fees if it's not truly free |
| Online checking | Low fees, wide ATM networks or ATM fee refunds | No branches for cash deposits |
| High-yield checking | Earning interest | Monthly requirements to get the rate |
| Interest checking at a branch bank | Larger balances | High minimums and low rates |
| Student and teen checking | Young people, often with parental controls | Fees once you age out |
| Joint checking | Couples and shared bills | Both owners have full access |
| Second-chance checking | Rebuilding after past account problems | Small monthly fees |
Fees to avoid
| Fee | How to avoid it |
|---|---|
| Monthly maintenance | Choose a free account, or meet the waiver, like direct deposit or a minimum balance |
| Overdraft and non-sufficient funds | Opt out of overdraft coverage, link savings and use low-balance alerts |
| Out-of-network ATM | Use in-network ATMs, get cash back at stores or pick a bank that refunds fees |
| Paper statements and checks | Go paperless; order checks from cheaper sellers |
| Wire and foreign transaction fees | Compare before you send money or travel |
Many banks have cut or dropped overdraft fees in recent years, but policies vary. See how to avoid overdraft fees.
What to compare
- Fees and how to waive them
- ATM access, including fee refunds
- Overdraft options, like declining transactions instead of charging a fee, or a small free buffer
- Early direct deposit, which some banks offer up to two days before payday
- The app, mobile check deposit, alerts and card controls
- Branch access, if you need cash deposits or in-person help
- Interest, if any, and the requirements to earn it
Keep spending and savings apart
Use checking for spending and bills, and keep savings in a separate account that earns more. A small cushion in checking, such as a few hundred dollars, helps you avoid overdrafts. See high-yield savings accounts explained.
Keeping your account safe
- Turn on alerts for large transactions, low balances and logins.
- Use two-step verification on your banking app.
- Never share codes sent by your bank. Your bank won't call asking for them.
- Check your account at least weekly and report anything you don't recognize quickly; the faster you report, the more you're protected.
Opening an account
- Compare a few banks and credit unions. See how to choose a bank.
- Apply online or in a branch with your ID, Social Security number or ITIN, and address.
- Make the opening deposit, if there is one.
- Move your direct deposit and automatic payments over, and keep the old account open for a month or two until every payment has switched.
If you've been turned down
Banks often check a consumer report, such as ChexSystems, that records unpaid overdrafts or closed accounts. You're entitled to a free copy each year. Dispute anything that's wrong, pay off any balance you owe, and ask about second-chance accounts, which many banks and credit unions offer.
Common questions
A checking account is built for frequent spending, with a debit card, bill pay and checks, and usually pays little or no interest. A savings account is for money you're keeping, and pays more interest.
It's a checking account that pays a higher interest rate if you meet certain requirements each month, such as direct deposit, a minimum number of debit card purchases or e-statements. If you miss them, the rate drops, often to almost nothing.
Banks often check a report from a company like ChexSystems, which records past account problems. You can get a free copy, dispute errors and pay off any amount you owe. Many banks also offer "second chance" or low-cost accounts with no overdraft fees that help you rebuild a banking history.
One is enough for most people. Some couples use a joint account for shared bills and individual accounts for personal spending, and some people keep a second account for bills only. More accounts mean more to track, so add one only if it makes your money easier to manage.
Yes, as long as the bank is FDIC-insured. Your deposits get the same protection as at a branch bank. Check the bank's FDIC membership, and be aware that some apps aren't banks themselves but partner with one.