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Start Here: “The Ultimate Guide to Personal Finance”

The best checking accounts for 2016

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Most of us hate our banks for gouging us for fee after fee, requiring minimums, and offering teaser rates that turn into nothing more than the same old BS accounts.

I’ve studied most of the checking accounts on the market and today, I’ll show you the best one I’ve found. In fact, it’s the one I use as my primary checking account.

Why is it important to choose the best checking account?

I talk a lot on this blog about building an automated personal finance infrastructure — a system that funnels your money to where it needs to go on a schedule, with minimal involvement from you. This way, the money left over after bills is yours to spend guilt-free. Chapter 5 of my book is all about how this system works and how to build your own.

Automating Your Money: How It Works


Of all the components in that system, none are more crucial than your checking account. As I wrote in the book:

“I think of my checking account like an e-mail inbox: all my money goes in my checking account, and then I regularly filter it out to appropriate accounts, like savings and investing, using automatic transfers.”

Your checking account is the center of it all, the nexus of your bulletproof personal finance system. Unfortunately, as I also point out in the book, checking accounts are the number one place where unnecessary fees are levied. That’s why I wrote this post today: to share my favorite checking account, the one I personally use.

BEST CHECKING ACCOUNT: Schwab Investor Checking

Most people think of Charles Schwab as an investment bank. But they also offer what I believe to be the best checking account available. Why?

  • Interest on your deposits
  • No fees
  • No minimums
  • No-fee overdraft protection
  • Free checks
  • Deposit checks via pre-paid envelopes or via iPhone app (snap photos of your check — no need to go into branch)
  • An ATM card
  • BEST BENEFIT: Unlimited reimbursement of any ATM usage

This last point is critical. How often do you go out with friends and have to withdraw money from out-of-network ATMs? How often do you find yourself at a liquor store at 3:30am, needing to withdraw $280, but you hesitate because of onerous ATM fees?

Me too.

Those fees can add up, and Schwab reimburses you for all of them. If you rack up $200 worth of ATM fees in a month, you’ll see a $200 deposit from Schwab before the month ends. This means you can use ANY ATM — corner stores, other banks, whatever — without having to look for some specific bank’s ATM.

When I saw this account, I wanted to marry it.

“But I don’t want to use an online bank.” Some people will balk at using Schwab because it’s an online bank. That’s fine, but I urge you to reconsider: It’s rare to find a checking account that (1) avoids screwing you at every turn, and (2) actually rewards you for using them.

Remember: the whole point of having an automated personal finance system is that your money gets taken care of automatically. Who wants to visit a bank branch for routine financial matters? Once this system is up and running, you wont have to.

You know by now that I’m all about big wins. The ATM-fee reimbursement for the rest of your life is enough of a benefit, but stack on the trust Schwab has built with me, and I’m a long-term customer.

Open a new checking account with Schwab

To get started with the Schwab Checking Account, click here. I have no relationship with Schwab except being a happy customer.

To learn how to fully automate your finances — including ultra-specific recommendations on accounts, investing, debt, negotiation, money & relationships, and buying a car/house — pick up a copy of my book, on sale for less than $10.

Tomorrow, I’ll write  about the best credit card.

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  1. My credit union (limited membership; my employer is affiliated) offers a rewards checking account with very, very sweet terms. Specifically, for 12 debit purchases a month I get:

    -unlimited ATM fee refunds
    -2.3% interest. This has fallen from 4.9% in 2009.
    -really, really, really awesome staff. I bank mostly online but this still matters to me.

    They also do manual underwriting for lines of credit and offer 0% loans for CSA / farm shares.

    • Those terms are great. I just hate minimum requirements to use debit cards, since there’s basically no consumer-friendly reason to use them.

  2. My wife and I argue about every month about her spending. I think having separate accounts might work, but she is against that. She is a stay-at-home mom, so all the income comes from me. It just seems like she doesn’t grasp the concept that there is only so much money per month and if we spend it we need to stop, so she just uses credit cards. She was raised where whenever she needed money, it was there. It’s just a struggle to get her on-board with the concept that we should stop frivolous spending and focus on the $20k credit card debt.

    Where in your diagram does spending money go? And by spending – I’m including household spending as well – groceries, etc. as well as eating out and personal spending.

    • Read my book to find the details of how the automation system works.

      And you’ll find Chapter 9 especially interesting. One of the topics is relationships and money, including specific scripts to use with your partner so you can work together on managing money.

  3. On link to sign-up for the Schwab account it says near the bottom: “Brokerage Products: Not FDIC Insured • No Bank Guarantee • May Lose Value”.

    It seems to me that their checking accounts are not FDIC insured.

    • Introducing the Schwab Bank High Yield Investor Checking account:

      Earn 0.25% variable APY— that’s 2 times the national average.1
      No ATM fees. We reimburse any ATM fee you are charged— worldwide.2
      Enjoy free standard checks, free online bill pay and a Visa® Platinum Check Card.
      Get full-featured FDIC-insured checking for up to $250,000.3

    • Brokerage products are not insured by the FDIC—that means the investment accounts and investment products you receive through Schwab, whereas the *checking* account is. And if what David says is true, FDIC insurance for up to 250K is much more than the standard 100K through most banks I believe(?) Although, who are we kidding at the end of the day, do you really think you can rely on the US government to protect your money when the big banks go down? Doesn’t matter where you store it, they’ve proven they are not able to fulfill those promises already, so you may as well just keep it wherever you get the best terms 😉

      Thanks for a killer writeup Ramit. I love my Schwab account.

    • Brokerage accounts are never insured. Banking accounts are

  4. I decided to go with the Fidelity option: mysmart cash account. Almost all of the same features except it is on the Fidelity platform which, from experience in the investment business, is rock solid.

    • Great choice! Lower broker fees than CS for stock trading, and similar checking account benefits.

    • They charge a 1% foreign interest fee that can’t be waived, which is why I’m going with CS.

    • My 401k is through fidelity… But when I looked at checking and broker accounts… Their broker account requires 2500.00 minimum to open. CS has no minimum. I wanted to go with fidelity… But I’m not interested in having to deal with fees and minimums.

    • State Farm Bank also has these same options and you can have as many accounts as you want and get also deposit cash using PNC BANK atm deposit sharing option to get cash into the online bank. They offer unlimited atm reimbursements and I prefer them more than Schwab

    • State Farm will only reimburse foreign ATM fees if there is a direct deposit made in the same month. I discovered this while researching account options for my teen nephew who is about to travel abroad.

  5. I opened the Schwab Investor Checking on your advice around 2 years ago, Ramit, and I love it! Another thing you might mention about the “no fees” is that it’s REALLY no fees–I was surprised to learn that there are no foreign transaction fees when you use the debit card abroad. I took advantage of this to save some money when I went on a trip to the Netherlands last year. I put the hotel charge on my Schwab debit card (with a Visa logo, so you can mostly use it like a credit card) to avoid paying a 3% fee.

    • “there are no foreign transaction fees when you use the debit card abroad”

      Can’t thank you enough for this tip. I opened an account there today (already had a Schwab Roth) and customer service called me to see if I had any questions (can you imagine that?). They confirmed that there are no foreign fees (my credit card charges 3% and my credit union debit card 1%).

    • But don’t they set their own currency conversion rates? Do they make the money they “give” you on fees back by giving you a slightly worse conversion rate?

  6. Ramit, as always, I really appreciate the wealth of knowledge you so freely share. I also think your book is great!

    I wanted to ask if you have recommendations for small business checking/saving/credit cards, or if you just recommend using the same products you’re mentioning in this series?


  7. Al Pittampalli Link to this comment

    The ATM reimbursement benefit is huge. Thanks for the tip, Ramit.

  8. I think you missed the most important feature of the schwab investor checking! Well most important if you travel internationally. There is 0% fee for taking money out in foreign currencies. Most charge 1-4% to take cash out in a foreign currency. This one doesn’t! PERFECT card for travel!

  9. I am embarrassed to be asking these question, but here it goes:

    When I write a check, sometimes people take forever to cash it. And I see the online balance in my account and *think* I have that much $$, but really I don’t and end up over-drafting. Hello $35 fee. So the representative at BofA did this thing where he set me up with 2 checking accounts which are linked to each other. One is for my debit card / direct deposit, the other for my checks. When I write a check, I have to go online, and transfer money to the account with the checks, and then I know that money is “out of my account”.

    Honestly I hate BofA with a passion, for numerous reasons but the set-up has worked. I keep thinking there has to be a better way than this, right?

    Also, how does overdraft protection work with CSchwab if there is no savings account linked to the checking that guarantees you have enough $$ to write that check?

    • If you can arrange it where you mail a check, like we do sometimes when I hire someone to work on the house, ING Direct allows for you to make a payment from their website and they mail it, the amount is then shown subtracted from your account. On the bottom is this notice: “If this paper check isn’t cashed within 90 days from the date it was sent, the funds will automatically be deposited back into your account.”

    • I have a question regarding your BofA setup. You have 2 accounts, but checks to only one account, correct? So when you write a check and move the money to the other account, how are the checks covered? Are you writing a check from the account where the funds are transferred to? We have this issue as well, so I’d like to set up something similar with our bank (if I can). Any additional information that you can provide would be greatly appreciated.

  10. I have the Fidelity account as well, along with their 2% cash back American express card and 1.5% cash back Visa card. I have also set it up so that the credit cards are automatically paid of in full every month. Never a missed payment and never any finance and late fees.