Kids & Money

October 5, 2012

In most checking accounts, fee is replacing free

You can still find big banks that offer free checking, but some of the best deals are offered by credit unions and community banks.

Free is one of my favorite words — unless it’s associated with checking accounts.

That’s when definitions get a little stretched, to put it mildly.

New data on checking accounts from

show the banking industry’s continuing push from free to fee.

The financial service company’s 2012 checking account survey found that so-called free checking accounts are actually more expensive than ever. To maintain a free checking account, the survey found, bank customers must keep an average minimum balance of $723. That balance is up 23 percent from a year ago — pretty steep for the average 18-year-old.

If your balance drops below the minimum? Your account is pinged for $5.48 on average, which is 25 percent higher than 2011.

Bankrate also found that only 39 percent of the banks surveyed offered a checking account with no minimum balance requirement and no monthly fee. That’s down from 45 percent from last year and from a high of 76 percent in 2009.

The study didn’t pinpoint checking accounts marketed to students, but the message for everyone, no matter how old your children, is the same: It pays to shop around and to read the terms and conditions in the fine print carefully.

You can still find big banks that offer free checking, but some of the best deals are offered by credit unions and community banks.

According to another Bankrate survey earlier this year, more than 70 percent of large credit unions offer free checking. That goes for credit unions on college campuses, which students typically can join. Some credit unions even roll out the welcome mat with perks such as gift card rewards for good grades, courtesy overdraft refunds and free financial education classes.

Some institutions promote student checking accounts, with a variety of features such as no minimum balance requirement, no monthly account fees and even free withdrawals at competitors’ ATMs. The accounts generally require you to be an undergraduate or graduate student, or be under a certain age, said Bill Hardekopf, publisher of

Bank of America recommends its eBanking account for college students. It has a monthly fee of $8.95, but that’s waived if you choose paperless statements and refrain from using a bank teller for transactions.

USAA, which primarily serves military families, has one of the better products geared to students. You don’t have to be a USAA member to open a USAA Free Checking account, which comes with no monthly service fees and no minimum balance. USAA will also refund up to $15 a month in other banks’ ATM fees.

To find the best student accounts, several websites offer tools to compare rates and product details., for example, recently surveyed about 80 universities to compare the best checking account from the big bank with the ATM at the student center or the university credit union. The study found that about 90 percent of the time, credit union student checking accounts are better than big-bank accounts.

Another good site is MyBankTracker, which offers free rate and bank information on more than 7,000 banks.

It’s getting harder for younger customers to avoid all checking account fees, but at least they have options.

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