By Morgan Quinn, Feature Writer
Welcome to the second installment of GOBankingRates' third annual "Best Banks" series, linking consumers with the best banks and bank accounts of 2015. Come back each week of January and February for our rankings and reviews of the year's best institutions and products, including brick-and-mortar banks, military financial institutions, online banks and CDs.
Of all the places you keep your money, your checking account is the foundation. It's the one of the most popular financial products in the country, used by roughly 200 million Americans, according to the Consumer Financial Protection Bureau. It's the bank account that funds your lifestyle, pays your bills and deals with everyday expenses -- and that's why it's so easy to neglect. After all, it's just a checking account, right?
Wrong. Changing the type of checking account you have, or even switching banks altogether, can save you money, increase your earnings and help you stay on top of your financial goals.
Start with fees. The typical checking account comes with about 30 fees, and just one of them -- the infamous overdraft -- can wipe out the interest you've earned in an entire year. But it's not like there aren't options out there. According to Moebs Services, 59 percent of all banks offer a free checking account, and thanks to a 2010 Federal Reserve ruling, you now have to opt in to overdraft protection before you're allowed to overdraw at any U.S. Bank. If you decide to switch to a checking account that doesn't charge overdraft or non-sufficient funds fees, you'll end up saving an average of $250 a year, per the CFPB.
Then there are interest rates. According to GOBankingRates' database, which aggregates checking account rates from thousands of banks and credit unions throughout the U.S., the average checking account earned a 0.17% APY in 2014. This year, you can do a lot better.
Aside from low fees and competitive APYs, the best checking accounts also have low minimum deposit requirements and additional perks, like rewards, credit monitoring services, automatic savings programs, and even money management software and budgeting tools. Basically, a checking account shouldn't be just a checking account -- it can do so much more.
In the second installment of its 2015 "Best Banks" series, GOBankingRates ranked the top 10 checking accounts in the U.S. based on five criteria: APY, minimum deposit, monthly maintenance fee, non-sufficient funds (NSF) fee and the minimum balance required to avoid a fee. If you are thinking of changing up your checking account in 2015, here are the best options.
Note that there was one tie for ninth place.
1. Bank5 Connect High-Interest Checking
Why: This product offers a 0.76% APY, the highest unconditional rate on our list, along with no monthly fees and a low NSF fee of just $15. The minimum deposit to open is $10.
Review: This checking account is just one of many online accounts that made our list this year. Online banks have consistently low fees, competitive APYs and added perks, and the High Interest Checking account is no exception.
The High-Interest Checking Account from Bank5 Connect boasts free online and mobile banking, bill pay and e-statements, along with a free first order of basic checks. Customers can also enroll in Bank5's UChoose Debit Rewards Program and earn points that can be redeemed for thousands of items online, including vacation packages, gift cards, electronics and more. Additionally, the account reimburses out-of-network ATM fees, up to $15 per monthly billing cycle.
How to open: Customers can open a High-Interest Checking account through the Bank5 Connect website or by calling the customer service phone number. Accounts require a $10 minimum opening deposit, which can be funded through an online transfer from an external checking account, with a direct deposit, by a check sent through snail mail or deposited through Bank5 Connect's mobile app.
2. FNBO Direct Online Checking
Why: Standard features include no monthly service fees, a minimum deposit of $1, no balance requirements and a beefy 0.65% APY. The NSF fee for this product is $33.
Review: This "no surprise checking account with no hidden fees" from FNBO Direct is another online checking account with a number of free features that boosted it above its competition. Along with no monthly services fees and relatively high APY, the account also offers free online banking, bill pay, account alerts and digital statements (though these features didn't affect the product's ranking). Though the account's NSF fee is a hefty $33 per transaction, the additional free services make this particular account a standout: free debit card fraud monitoring, free incoming wires and stop payments, as well as free person-to-person payments with Popmoney.
How to open: Online Checking accounts can be opened through the FNBO Direct website. The application takes approximately 10 to 15 minutes to complete, with the minimum deposit to open an account just $1. You will need to provide your Social Security or Tax ID number, as well as a state-issued driver's license or ID card. You will also need some employment information, including employer name, address and phone number, and details on any loans or mortgages you have.
3. Bank of Internet USA Rewards Checking
Why: This account boasts an APY starting at 0.47%, no monthly service or NSF fees and no minimum monthly balance. The minimum deposit to open an account is $100.
Review: The Bank of Internet USA Rewards Checking account is unique in that customers can earn up to a 1.25% cumulative APY by meeting certain requirements, such as using the account's Rewards Checking Visa Debit Card at least 10 times a month. Consumers have access to several free features, including bill bay, cash-back purchase rewards and FinanceWorks money management software, powered by Quicken.
This account offers unlimited ATM reimbursements. Customers can deposit funds via mobile deposit or the MyDeposit feature online, which deposits checks instantly using a computer and a scanner. The $100 minimum opening balance worked against Bank of Internet USA in the rankings, but the abundance of features, like rewards and money management software, makes this a very attractive option for consumers looking to make the most of their checking product.
How to open: Customers can open a Rewards Checking account at Bank of Internet USA's website. The process takes about 10 minutes and you will need to provide a U.S. Social Security number, a valid form of identification and previous home address. To fund the account, you'll need either a credit or debit card or a U.S. checking or savings account.
4. Capital One 360 Checking
Why: A no-fuss account with no minimum opening deposit, no monthly service fee and no minimum balance requirements. Depositors earn a starting interest rate of 0.20% APY, with no standard NSF fee.
Review: The 360 Checking account from Capital One 360 offers tiered interest rates, starting at 0.20% APY and ranging upward to 0.80% APY for balances above $100,000. And while this wasn't a factor in the rankings, the large number of ATMs consumers can access makes it easy to avoid unnecessary and costly fees: Customers get fee-free ATM access at over 40,000 ATMs (38,000 Allpoint ATMs and 2,000 Capital One ATMs). The truly standout feature of this account was its overdraft fee structure; instead of incurring a charge of $30-plus every time you overdraw, Capital One 360 will charge you interest on that money -- meaning you'll typically be paying pennies instead of dollars. (The bank advertises that $100 overdrawn for 10 days will incur only $0.31 in overdraft charges.)
How to open: Visit the Capital One 360 website to open an account. You'll need your checkbook in order to make your first deposit electronically from your existing checking account. All 360 Checking deposits are subject to a two-business day hold, though certain deposits will be available sooner.
5. iGObanking.com iGOchecking
Why: This account has no monthly fees, no minimum balance, a low opening deposit of $1 and an APY of 0.25%.
Review: The iGOchecking account from iGObanking.com offers a series of other impressive services, including bill pay and presentment tools that enable customers to import bills directly to their accounts and pay them online. Account holders can also send peer-to-peer payments electronically using iGObanking.com's funds transfer service. ATM withdrawals are free at Allpoint ATM locations, but NSF fees will run account holders $30 a pop. Still, this account is appealing to those who want to manage their money, pay bills and transfer money to friends and family all from one account.
How to open: The iGOchecking account can be opened online in about 10 minutes. You will need your Social Security number, a valid form of identification and previous home address (if you have lived at your current home address less than two years). For electronic funding, you will need the routing number of an external U.S. checking or savings account.
6. Ally Bank Interest Checking
Why: The Interest Checking account has no monthly maintenance fees and no minimum opening balance requirement. An overdraft paid or returned fee runs just $9, while the starting APY is 0.10%.
Review: What makes this account stand out among the competition are all the freebies: no overdraft transfer service fees, free incoming wires, free official and cashier's checks, and free Ally Bank standard checks. Customers can also send money to friends and family using the Popmoney service. One of the lowest on this list, the NSF fee of just $9 ensures account holders won't see their balances deplete quickly because of overdrafts.
How to open: Customers can open an account in about 10 minutes on the Ally Bank website. You will need to provide your name, street address, date of birth and a Social Security number. You might also need to provide your driver's license or other identifying documents.
7. TIAA Direct Interest Checking
Why: This product boasts no monthly maintenance fees and no minimum balance requirements. The opening deposit requirement is just $25, while the APY on the account is 0.05%. The NSF fee is $25.
Review: The modest 0.05% APY put TIAA Direct below some accounts on this list, but a tiered rate system means customers can earn up to 0.15% APY as their checking balance grows. The checking account's lower rates are offset by its multiple free perks, including checks, the eBills online bill-paying service and transfers between the Interest Checking account and accounts at other U.S. banks. In terms of accessibility, account holders can deposit checks from their mobile phone or tablets, set up alerts for account activities and take advantage of the product's overdraft protection service, which will draw money from a linked external account. Customers have access to 23,000 fee-free ATMs nationwide.
How to open: Customers can open an Interest Checking account on the TIAA Direct website. You must be a U.S. citizen or permanent resident, at least 18 years old, have a Social Security number and a driver's license, U.S. passport or other government-issued ID. You must also provide the routing numbers of the external U.S. bank account you want to use to fund your new account.
8. EverBank Yield Pledge Checking
Why: This account charges no monthly service fees and doesn't have a minimum balance requirement to earn interest. The minimum amount to open is $1,500, for which customers can earn interest at a base 0.30% APY. The NSF fee is $30.
Review: The $1,500 minimum opening deposit and $30 NSF fee pushed this checking account lower in our rankings, but if you are looking for a fairly liquid place to park your cash, this product is a smart option. Though the base rate is 0.30% APY, the Yield Pledge checking account from EverBank is currently offering several tiered introductory rates, such as 1.40% APY for the first six months on balances up to $100,000, and first-year APYs starting at 0.85% on balances below $10,000.
Thanks to the tiered rate system, the more you keep in the bank, the higher your yield will climb. The account incurs no monthly maintenance fees, but customers will have to maintain minimum balances and other criteria to take advantage of other perks, like reimbursements of ATM fees.
How to open: Customers can open an account on the EverBank website and will need to provide a Social Security or Tax Identification Number and proof of address if they've lived in a home for less than three months.
9. KeyBank Hassle-Free Account (tie)
Why: This account has no monthly service fee, no minimum balance requirement and no NSF fee -- though also no APY. The minimum deposit to open the account is $10.
Review: KeyBank tied with another bank, Simple, to round out the rear of our top 10 checking accounts. The Hassle-Free account from KeyBank offers a number of features, including online banking and bill pay. There are no overdraft or bounced check fees with this account -- because there aren't any paper checks altogether. The product's standout feature is its Relationship Rewards program*, which allows customers to earn points just by actively using their accounts and debit cards.
*There may be an annual fee for the KeyBank Relationship Rewards program based on the type of checking account you have.
How to open: Account availability is limited by region, so you'll have to enter your zip code on the company site to see if you qualify. If you do, you'll be able to fill out an application online. FYI: If you close your account within 180 days of opening it, you will be charged a $25 account early closure fee.
9. Simple Checking (tie)
Why: This one lives up to its name: Simple's checking account has no minimum deposit requirement, no monthly fee, no minimum balance and no NSF fee. The trade-off? A nominal 0.01% APY.
Review: With the free online checking account from Simple (an online banking service and app hailed by media as "Bank 2.0"), there are no overdraft or monthly fees, and customers have access to 55,000 fee-free ATMs. The fact that the account isn't geared to earn interest hurts it a bit in our rankings. Still, Simple Bank customers get access to unique technology and tools that help them keep their spending under control and reach their financial goals. Take the "Safe to Spend" feature, for example, which factors in upcoming bills, scheduled transactions and transfers so you know how much you can safely spend right now. Additionally, the "Goals" feature puts aside money every day so you can grow your savings.
How to open: Customers must provide SimpleBank with an email address to receive instructions on how to open an account -- you won't be able to open an account on the company's homepage. Funds can be deposited using direct deposit, online transfer, or by uploading a photo of a check using the mobile app.
To compile its list of the top 100 banks by asset size, GOBankingRates surveyed the FDIC's list of banks sorted by assets, excluding non-active institutions, those with less than $1 billion in assets, investment banks and any institutions that require customers to use investment services to access commercial bank accounts. This list of 100 banks included 10 online banks as well as conventional brick-and-mortar institutions. In addition, the study considered an additional 20 online-only banks, according to the GOBankingRates database (no asset threshold was consulted for online banks). These lists were compiled Oct. 23, 2014 and verified against the individual institutions' websites.
GOBankingRates examined personal checking accounts belonging to 120 banks: the top 90 U.S. banks by asset size, as well as the top 30 online banks (see above for selection details), taking into account a number of factors to quantitatively rank each institution's checking product: (1) minimum deposit, (2) monthly maintenance fee, (3) minimum balance to avoid fee, (4) annual percentage yield (APY) and (5) insufficient funds (NSF) fee. Each criterion was individually scored from most to least favorable; The criteria were weighted equally except minimum balance to avoid a fee, which was given a lesser weight, and accounts were ranked by overall score. In the case of a 10th place tie, GOBankingRates deferred to APY, monthly maintenance fee, NSF fee, and then minimum deposit requirement as tie breakers. Data was compiled via the GOBankingRates interest rate database and verified against the individual institutions' websites.
Annual percentage yield was based on minimum deposit required to open an account. Note that some interest rates might be short-term or promotional offers only and it is possible additional terms and conditions must be met in order to obtain the interest rates listed. Rates and availability might vary by region. All checking account data was last verified as of Dec. 23, 2014; terms and conditions are subject to change at any time at the discretion of individual financial institutions. Please verify terms and conditions before opening an account.
.GOBankingRates is a personal finance and consumer interest rate website owned by ConsumerTrack, Inc., an online marketing company serving top-tier banks, credit unions and other financial services organizations. Some banks mentioned in this ranking are clients of ConsumerTrack, Inc., which serves more than 100 national, local and online financial institutions. Rankings are 100 percent objective and no institution, client or otherwise, paid for inclusion or specific placement.
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