With the economy down the tubes it would be no surprise if banks stopped offering free checking accounts. Surprisingly, recent surveys show that approximately 35% of checking accounts don’t charge monthly fees.
The banks offering these free checking accounts aren’t doing it just to be nice. They are a business and they need to make money – off you.

Newly enacted laws have stopped the banks from earning profits on some parts of their business. Banks have simply started charging more fees and getting creative to make up for lost revenue.

Overdraft Fees: Have you taken too much money out of your account lately? Most people are shocked when they see that banks charge about $35 per overdraft incident. Banks rake in $38 billion a year in overdraft fees alone.

Check Clearing: Banks have gotten smarter about the ways in which they apply their overdraft fees. For example: Imagine that you have $200 in your free checking account, and you write five checks, for $100, $75, $50, $25, $25. At this point you have written $275 worth of checks against an account that only has $200 in it.

What banks do in this situation is to clear the biggest checks first so that the small ones all bounce and you rack up more fees. Instead of clearing the $25 checks that your account can cover they will clear the bigger ones first so your account runs out of money. Then they charge you an overdraft fee on every single small transaction that you did.

Tying Up Your Cash: Trying to qualify for a free checking account may end up costing you more than paying a monthly fee. Consider the fact that you need to keep around $4,000 in your accounts so you don’t incur any fees. If you took that money and put it elsewhere you could earn interest on it. The banks are earning money off of your money and enticing you to keep more money ion their checking accounts by offering you fee checking as long as you maintain a certain balance.

What happens if your car breaks down one month and you have to make a large withdraw from your account? You’ll fall below the minimum balance and end up paying a fee anyway.

Yes, it’s great to have a free checking account – but make sure to check out all your options and figure out what the best deal is.