Free checking accounts are not always free

by Nicole Duarte

published by the Chicago Defender, March 17-19, 2006

Small fees, like squirrels gnawing at your ankles, will erode your checking account needlessly.

Most banks now offer free basic checking accounts outfitted with convenient features like online bill pay and online banking to streamline banking. However, with low interest rates and stiff competition, banks increasingly earn their money from service fees charged for myriad little things.

These fees are not secret. When you open an account, ask for the fee disclosures and look through the terms of the account. There you might learn your bank may charge you to get a printed balance statement, or to check your account balance at another bank's ATM. Some banks charge for online banking transactions or to have a teller help you. Almost all banks now charge to physically return your cashed checks. Temporary checks, money orders, fund transfers and copies of any of your banking documents will also likely cost a small fee.

Consider cost and convenience when choosing a bank. Bigger banks like Bank of America and Chase have more ATMs in more cities, a convenience that means they can charge a monthly maintenance fee unless you set up a monthly direct deposit into your account. Smaller local companies like Harris Bank may not charge a monthly fee, but if you leave town, you'll still be paying $1 to $3 per ATM transaction on top of what the ATM charges you.

What to ask when you open an account:
- How much do checks cost? ATM/Debit card?
- What are the fees associated with the debit card? (Some banks charge 25 to 75 cents per retail debit purchase)
- How much does it cost to replace the card if it's lost or stolen?
- Is there a daily or monthly minimum balance requirement? What are the penalties if you fall below the minimum? For example, Lasalle Bank charges $5 per month for falling below its daily minimum.
- What kind of overdraft protection is available?
- What is the charge for being overdrawn for longer than a day? (typically $5 to $7 per day on top of a flat $25 to $35 per-item charge)
- What are the charges to get checks physically returned to you? (usually $3 to $5) To receive check images? (typically $1 to $3)
- Is there a charge to have a teller or customer service agent help you with your account? For example, to have an agent help you balance your account, Harris Bank charges a $40-per-hour fee with a $15 minimum.
- What is the charge to pay bills by telephone? To check your account balance by phone?
- Is there a charge to stop payment? (typically $25 to $35)

Checking account information doesn't affect your credit rating, so if you hate your new account, close it and try another bank. However, be aware you may be charged an early termination fee, usually $25 to $30 for closing the account before 90 days have elapsed.