No matter where you are in your financial journey, one thing most of us have in common is the ownership of a checking or cash management account. In fact, the latest FDIC numbers numbers show that only 6.5% of Americans were “unbanked,” meaning that no one in the household had a checking or savings account. For the rest of us, the average checking account balance was $3,500 .
Way back when, a checking account was literally that: an account from which you wrote checks. If you didn’t have enough cash on hand, or didn’t want to use it, a check was an obvious alternative.
Check-writing is still a viable option for even the most tech-savvy bankers, but 21st-century checking and cash management accounts now offer a lot more than just a place to hold your money.
What Is a Free Checking Account?
While some banks still charge hundreds of dollars a year in account fees, a growing number of financial institutions are starting to offer free checking, including traditional and online banks, credit unions, and even some credit card companies. And “free” can mean anything from no account fees to no minimum balances to free overdraft protection.
But is it really free, or is there an asterisk somewhere in that promise?
What Is a Cash Management Account ?
In addition to a debit card and checks, a cash management account might also include online deposit and bill payments, and P2P cash transfers like other checking accounts.
Where it stands apart is its dual function as a savings and investment account, with high-yield interest, which means the money you don’t spend will grow.
It’s a good idea to keep in mind that not all cash management accounts are created equal. Some are backed by FDIC insurance while others aren’t.
As always, it’s important to do your research and read the fine print to determine whether a cash management account is right for you.
Choosing the Account for You
The huge variety of options is one of the best things about the proliferation of free checking accounts. But it can also be a huge headache when you’re trying to narrow your choices. Use these guidelines to choose the checking account that’s best for you.
First, Figure Out Your Goals
What do you need your checking account to do? Beyond just storing your money, a checking account can come with lots of bells and whistles. If you’re mostly a cash person but need a way to pay bills online, you may want to opt for ease and convenience. Seek out features like no-minimum-balance requirements, simple linking for online bill payments, and a slick, easy-to-navigate app.
Conversely, if you use your checking account so much you know your debit card number by heart, you may want to choose perks that can help you save as much as you can. Look for zero maintenance fees, high interest rates, and free access to a large network of ATMs. Consider how many checks you’ll likely write, how many account transfers you’ll need to make, and whether or not you need to interact with human bank tellers.
Do You Need a Physical Location?
Some financial institutions will only accept deposits into their branded ATMs, so if you’re planning to deposit cash on the regular, you may need to choose an institution where you can easily accomplish that.
If you’re planning to rely solely on direct deposit, however, this isn’t as much of a concern. Instead, look for financial services that offer a large network of partner ATMs where you can withdraw cash without paying a fee.
Get more out of your cash by setting
up direct deposit with SoFi Money today.
What Else Should I Consider?
We’ve covered the general must-haves, but if you’re still torn between two or three institutions, it’s a good idea to compare benefits like fraud protection, cash-back, or other loyalty rewards. When you open a SoFi Money cash management account, you’ll also gain access to financial planners, career coaching, and a large community of other, like-minded members.
Whichever money management account you choose, don’t sign on the dotted line until you read the customer account disclosure to make sure there aren’t any unknown fees.
Also be sure that the financial institution is reputable and insured by the Federal Deposit Insurance Corp (FDIC) or the National Credit Union Administration (NCUA) so that your money is safe.
If it’s a new-ish institution, or you feel like an offer is too good to be true, take another look at the account disclosure to confirm terms and conditions.
How to Open a Free Online Checking Account
Once you’ve completed your research and found the right account, getting started can be as easy as a few clicks. Here are some steps you might encounter:
• Prove it’s you. This can include your Social Security or other ID number, driver’s license number, or other financial-institution numbers, such as debit cards, routing numbers, or account numbers. (You may also need these to transfer in your first deposit or link accounts.)
• Decide on your account type. Are you opening an account just for you, or is it a joint account? Are you wanting checking, savings, or both?
• Fill out the application.
• Make your first deposit. You may be able to add money to your account right away, or if doesn’t require a minimum deposit, you can wait until you have the funds.
• Download the app. It can include perks such as spending-tracking, notifications, and bill pay reminders.
About SoFi Money
Ready to get started? SoFi Money is a cash management account where you can spend, save, and earn all in one place. Earn 0.20% APY (subject to change) on all your cash and get reimbursed for ATM fees anywhere in the world (subject to change).
Each business day, cash deposits in SoFi Money cash management accounts are swept to one or more sweep program banks where it earns a variable interest rate and is eligible for FDIC insurance. FDIC Insurance does not immediately apply. Coverage begins when funds arrive at a program bank, usually within two business days of deposit. There are currently six banks available to accept these deposits, making customers eligible for up to $1,500,000 of FDIC insurance (six banks, $250,000 per bank). If the number of available banks changes, or you elect not to use, and/or have existing assets at, one or more of the available banks, the actual amount could be lower. For more information on FDIC insurance coverage, please visit www.FDIC.gov . Customers are responsible for monitoring their total assets at each Program Banks to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. The deposits in SoFi Money or at Program Banks are not covered by SIPC.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC . Neither SoFi nor its affiliates is a bank.