Recent consumer-friendly credit-card legislation limiting pesky fees and new rules that put a lid on overdraft charges have put a damper on banks' bottom lines. The downside: Banks used those revenues from fees to subsidize free checking. Now when you open a checking account, you'll likely pay a monthly service charge unless you keep a minimum balance, use your debit card a certain number of times each month or meet some other condition.
One way to avoid a service charge -- and the hassle of keeping close tabs on your account -- is to bank online. Because online banks don't have the expense of maintaining brick-and-mortar branches, they can offer lower fees and higher interest rates on your cash. And you can usually use any ATM free because most online banks rebate the fees.
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Small community banks and credit unions sometimes do a lot of business online, offering higher-yielding, online-only accounts for anyone who has Internet access (search for one at www.checkingfinder.com). To qualify for these accounts, you must use your debit card ten to 15 times a month, arrange for one automatic payment or direct deposit, and receive your monthly statement online.
To find the best online checking accounts, we asked Informa Research Services, a financial-services research firm, to search its database for accounts with free online-banking and bill-paying services, low fees, and high rates. Then we trimmed the list to six standout banks. In this low-rate environment, bank yields can drop quickly, so recheck the particulars before you sign up (for more ideas, see www.bankrate.com).
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