Loans

Free checking can stand out as a huge benefit for those looking for a place to store their money, but there are also some aspects of these accounts that can be a little less appealing. The trick to deciding whether one is right for you is holding up your goals against its pros and cons. This way, you’ll have a better shot of making the best decision for your money.

The Pros

- Checks are free. Probably one of the most obvious perks of free checking is the fact that you don’t have to pay a dime to write checks once you open an account. For those looking to get started in banking, this is a great way to do it, especially for those looking to build up a good rapport in the credit world.
- Low minimum amount to start. Typically, with free checking, you can open an account with as little as $50. Again, this is great for the young person who wants to build up credit but doesn’t have much up-front money to do so.
- Free debit card. Debit cards are all the rage in the banking world because they offer the benefits of cash with some of the added perks of a credit card. When you open an account with most financial institutions, they will give you a free debit card to easily pull your money out of the ATM or at a store utilizing penalty-free cash back withdrawals.

The Cons

- Monthly automatic activity often required. One way that financial institutions make sure that they benefit from offering you free checking is by becoming actively involved with your money. So some require that you either have money directly deposited or withdrawn every month. If you don’t participate, either you can’t open the account, or fees will magically appear.
- High overdraft charges may take your money. When you open an account like this, it is likely that you will pay royally for falling below the generous minimum $0 balance. Some fees can be as high as $25 per overdraft with an additional $5 charge each day that your balance in the negative. This can add up quickly if you went on a debit card shopping spree not knowing that your paycheck didn’t clear.

Free checking can definitely benefit those who read all of the fine print when they open an account. So if you think this is the road you would like to take, make sure you do the same to avoid spending more money with the bank than with a retailer.