Bank of America, the second-largest U.S. bank by assets, decided this month that providing free checking accounts to lower-income customers was too much of a burden to bear and removed the option from its account offerings. Customers must now either maintain a daily balance of $1,500, have a direct deposit of $250 or more, or pay a monthly fee of $12.
I’m going to guess that if you don’t have a direct deposit of $250 or more going into your account, $12 being taken out of it is going to hurt a bit. There is no shame in that. A great many people are just one missed paycheck away from financial disaster. This is the country in which we live.
No one, however, should be penalized for that. If Bank of America wants to put its foot on the neck of already marginalized people, then The Root is here to provide you with some alternatives to free checking accounts.
Not all of these options are free, but they carry a low-enough cost to make them a consideration:
Simple is an online bank that offers fee-free checking accounts. Using this bank does require a phone that can run its banking app, but the app is beautiful and easy to understand. There are some pretty cool features as well, including a Goals saving system; a safe-to-spend function that will track your current balance, future bills, your budget and your available balance, and let you know how much is OK to spend from your account; trackable spending; and phone deposits for checks.
You apply for an account online, and once approved, you will receive a debit card in the mail. There is a preferred network of ATMs to use that you can find in Walmart, Walgreens, Costco, Dunkin’ Donuts, Target, CVS and Safeway. Basically, they are everywhere.
You can access your account from the web or from the app. There are no fees, not even on returned items.
The downside to Simple, like most online banks, is that there isn’t a physical bank in which to deposit cash. Other than that, I highly recommend it. I’ve had Simple for about five years now as a secondary bank, and it’s worked out pretty well.
Ally is another online bank that offers free checking. You get free checks with the account as well as a debit MasterCard. Capital One’s 360 Checking is another free account with no monthly minimums. It offers free ATM use through the Allpoint network, mobile deposit and online bill pay, and your first book of checks is free.
Credit unions are always going to be the better alternative to a big bank. They may have some sort of membership requirement, but most are pretty generous about allowing family members of an established member to join.
Kinteca Credit Union is nationwide and services a wide variety of employers and companies. As long as you use your debit card 10 or more times a month, there is no fee for the account.
Prepaid Debit Cards
Chase Liquid is a prepaid debit card offered by Chase Bank. You can open an account at a Chase branch and receive your new debit card the same day. Chase charges a flat monthly fee of $4.95 for the account. That’s it.
You can make deposits at any Chase branch or Chase ATM using your card. You get a Visa debit card, so you can use it to make purchases and pay bills over the phone or online. You can set up Chase alerts and use online bill pay.
Also? Your funds are federally insured just as if you had a regular checking account. This is a bonus that Chase Liquid has over other prepaid-card providers.
The only extra fees come in if you deposit an item to your account that bounces or if an enforcement order, levy or garnishment gets sent to Chase.
For deposited items that bounce, Chase will charge you $12 per item. For the processing of any legal item, the bank will charge you $75 whether or not it gives money to the entity that sent the order in the first place.
Bluebird is a service that American Express has in partnership with Walmart. It is another prepaid debit card option. There is no monthly fee, there is no annual fee and there is no fee to set it up if you do so online. You can also set it up by going into a Walmart and getting a card there, but that will cost you $5.
You can add money to the card by going into Walmart and doing it at the Walmart Money Center, setting up direct deposit, going online with a debit card or depositing a check using its mobile deposit feature.
According to its website, if you use the mobile deposit feature, your funds will be available within 10 days. If you want access to the funds within minutes, you can pay either a 1 percent fee or a 5 percent fee depending on how much the check is for. The minimum fee is $5.
There is also an option to add funds to the card at a retailer other than Walmart, but there is a $3.95 fee for doing that.
The cards use the MoneyPass ATM network, Much like any other bank, using an out-of-network ATM will cost you $2.50.
The card itself is accepted as a form of payment at any business that accepts American Express. This may be the one drawback, since American Express is not accepted everywhere.
It still is a pretty good option, however.