WASHINGTON—While credit unions face a growing threat from online checking accounts, they still offer the best checking deals when it comes to low fees, a new study shows.
“Consumers looking for the lowest fees on checking accounts should focus on offers from credit unions, which are 26% cheaper on average than online checking accounts—the next-best option,” stated WalletHub in its 2016’s Best Online Checking Accounts report.
But the report detailed the threat credit unions—and all brick-and-mortar FIs—face from the large number of online checking accounts that are emerging and consumers’ willingness to use them.
“The increased reliance of consumers on online banking has significantly changed the personal finance landscape in recent years,” stated WalletHub. “Financial institutions, taking advantage of the lower costs associated with online and mobile banking transactions, are in many cases offering incentives for consumers to stay out of their branches.”
WalletHub said this can mean more perks and, in some cases, far fewer fees for those consumers willing to switch to an online-only checking account.
“In fact, with the near disappearance of free traditional checking accounts, an online-only account is often the most affordable option for consumers,” the company stated. “Online-only accounts charge 41% lower fees than their branch-based counterparts on average and have 16% higher interest rates, according to WalletHub’s latest Banking Landscape Report.”
WalletHub’s checking report compared more than 50 of the most popular online-only checking accounts from 44 financial institutions across the U.S.
The Bank of Internet Rewards Checking came in at No. 1. WalletHub said the account doesn’t charge any monthly fees, overdraft fees, or insufficient funds fees. ATM withdrawals also are free, as Bank of Internet will reimburse charges incurred at out-of-network ATMs and doesn’t assess fees for in-network withdrawals, the report stated.
“This account also offers an APY of up to 1.25%, but you’ve really got to earn that maximum rate,” said WalletHub. “Bank of Internet gives you a 0.4166% bump in APY for each one of the following qualifications that you meet: 1) receive direct deposits totaling $1,000 or more per month; 2) make at least ten debit card purchases per month; 3) make at least fifteen debit card purchases per month. Keep in mind that your balance will not accrue interest if you fail to meet at least one of those qualifications.”