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Checking Accounts 101
Updated On November 1, 2021
Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.
What is a checking account?
An online checking account is a bank account where you can write checks, pay bills and earn interest. Many of the best checking accounts deals are online, no monthly fee checking accounts. Assuming that your bank is federally-insured through the FDIC (Federal Deposit Insurance Corporation), your no fee checking account also will be FDIC-insured up to $250,000.
The best free checking account often is an online, high yield and no monthly fee checking account. A high yield checking account enables you to earn interest on your checking account balance at a higher rate than a typical checking account. A no monthly fee checking account also means more money in your pocket, since you would have to pay a monthly fee. Some banks may ask you to maintain a minimum monthly balance, while other banks will not.
Why do you need a checking account?
You need an online checking account for several reasons:
- Write checks. The best free checking accounts can help you write checks and pay bills, and use free online bill pay.
- Earn high yield interest. The best checking account helps you earn interest income that can be significantly higher than the national average for a traditional checking account. Most high yield, online checking accounts offer an annual percentage yield (APY) that is higher than 1%.
- Ease of use. An online checking account is mobile friendly and can help you manage your account and transfer money with ease.
- No fee checking account. Traditional checking accounts may include a minimum balance or monthly checking fee. You should look for checking account deals that offer a no monthly fee checking account.
- Limit on transfers. Under federal law, you can withdraw or transfer funds no more than six times per month from a checking account.
What is the difference between online, no feechecking accounts and traditional checking accounts?
When people ask “what’s a checking account,” they also like to understand the difference between traditional checking accounts and online, no fee checking accounts.
Here are the primary differences:
Traditional Checking Accounts: A traditional checking account is a default checking account offered by a brick-and-mortar bank. Traditional checking accounts may have a monthly fee and may require a minimum balance. The biggest downside of a traditional checking account is the annual percentage yield. Compared to CDs and investing accounts, the yield on traditional checking accounts are very low.
Online,No Fee Checking Account: An online, no monthly fee checking account is almost exclusively online, offers a much higher yield and has no monthly fee. The best free checking accounts can offer higher annual percentage yield (APY) because the bank saves costs by not having additional or any physical branches to support online checking accounts. Most online, no fee checking accounts have excellent customer service, so you still have access by phone, email or chat to speak with customer service. An online no fee checking account is a great option if you are comfortable with mobile and online banking. With the best free checking accounts, the good news is that you can earn a higher yield and typically do not need to maintain any minimum balance. Some online checking accounts may also pay you a higher yield if you have a higher balance. This is known as a tiered rate checking account.
How do you find the best free checking accounts?
You can find the best free checking accounts here on Mentor. Mentor’s list of the best free checking accounts includes banks that we believe offer the best no fee checking accounts rates, best customer service, checking account management tools and lowest fees.
You can compare these online checking accounts on Mentor, and choose the best checking account for you.
Then you can open a no monthly fee checking account directly through Mentor with one of our partners. It’s easy to apply for checking accounts. All you will need to provide is basic information such as you name, Social Security Number, driver’s license and other contact information.
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