When most people look for a bank account, one of the most important factors at which they are the monthly price of keeping the account open. Though there are many accounts out there, some of the most popular among those new to the world of banking is free checking accounts. Though these accounts can actually have a lot of benefits, it’s still important to know what you’re getting into before you sign up. Below is some of the information to keep in mind when you’re looking to open a free checking account.
A Basic Account
It’s important to remember that the average free checking account is a fairly basic type of checking account. It usually doesn’t have many of the fancier features that are common with more expensive accounts and many free checking accounts even have limitations in place. This tends to make sense because free checking accounts can often be looked at as “starter” accounts. These are perfect for those just starting out or who don’t quite know what they need from a bank, but not necessarily meant for those who have more specific banking needs. If you’re opening a free account, be aware of the tier of service for which you are signing up.
Strings Attached
The good news about free checking accounts is that they are actually free. If a bank advertises that an account has no monthly charge, it will have no monthly charge. It may, however, not always stay that way. It’s always a good idea to talk to an account specialist before opening your free account to see what kind of actions you’ll have to take each month to ensure that you don’t have to pay a fee. It’s common to see requirements that include a minimum balance or a certain number of direct deposits each month, though this is something that definitely varies by the bank.
Significant Benefits
While your bank account might not have as many features as a paid account, it still allows you access to some of the benefits that come with banking with a specific organization. This might make it easier to get a loan, give you access to free notary services, or even give you the chance to make use of certain services that non-members simply cannot use. If you’re opening up an account with a bank, make sure that you understand the benefits that come with working with that bank in particular.
A Loss Leader
Above all else, it’s important to remember that free checking accounts work on the retail principle of being loss leader. A bank can afford to give customers free checking because those accounts are what get account holders in the front door. Once you get an account the bank will probably begin to reach out to you about other products. This can be a mutually beneficial arrangement, but it’s still something of which you should be aware. Make sure you know what the bank is trying to sell you before you get a free account.
Though free accounts might not be feature-rich, they can be very useful for those on tight budgets or who are looking to set up a very simple financial safety net. Don’t be afraid to ask questions about your account and always read the fine print before you sign up for anything. Free accounts are a great place to start if you have never had much experience with banking and signing up for one of these accounts does not stop you from upgrading to a different type of account with the same bank in the future.