3 Best Checking Accounts for Low-Income Households
KEY POINTS
- Checking accounts that don't charge monthly fees or overdraft fees can save you money.
- Some free checking accounts will also pay you rewards on your spending or interest on your deposits.
- Look for an account that doesn't have minimum deposit requirements and cushions you against accidental overdrafts.
If you're on the lower end of the pay scale, it can be hard to find financial products that match your needs. Indeed, it can feel like the system is geared toward people who make more money. Particularly as some bank accounts will only waive monthly account fees if you make regular deposits or maintain a certain balance.
The good news is that there are some great free checking accounts that won't ding you for unexpected extras. Even better? Some will even pay you interest or rewards. Here are three to consider if you're a low-income household.
1. Discover® Cashback Debit
Not only is there no monthly fee for the Discover® Cashback Debit, but the account perks go above and beyond many regular checking accounts. In fact, it gives you more perks than several accounts that charge a monthly fee.
Discover® Cashback Debit
On Discover Bank's Secure Website.
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On Discover Bank's Secure Website.
- Cash back rewards on debit cards
- Early direct deposit
- No monthly maintenance, NSF, or overdraft fees
- Great customer service
- Cash back rewards capped
- No interest-bearing checking account
- No physical branches
- No reimbursement for out-of-network ATMs
The Discover Cashback Debit account could be a lucrative option for those who frequently use their debit card. With cash back on eligible purchases, it's possible to earn even more than you could with a typical checking account APY without changing your habits at all. The fact that Discover has done away with many common checking account fees only adds to its appeal.
Here are some of the reasons people are excited about this account:
- Commitment to no fees: Discover® Bank won't charge monthly account fees or overdraft protection fees and there are no minimum balance requirements. If you lose your debit card, it won't charge you for speedy delivery of a replacement either.
- Cash back: You'll get 1% cash back on up to $3,000 of debit card purchases each month, which could translate to as much as $360 a year.
- Early direct deposit: Early pay means you might be able to access direct deposits, such as your paycheck, two days before the payment date.
2. Axos Bank Rewards Checking
Axos Bank Rewards Checking is another no-fee account that comes with a raft of extra benefits. It won't charge a monthly fee or overdraft fee, and there are no minimum balance requirements. However, if you want to earn interest on your balance, you'll need to jump through quite a few hoops.
Axos Bank Rewards Checking
On Axos Bank's Secure Website.
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- High checking account APY
- Unlimited ATM fee reimbursements
- No monthly maintenance, NSF, or overdraft fees
- No monthly balance requirements
- Cash back checking option
- Must meet certain requirements to earn the highest interest tier
- Low savings and CD APYs compared to competitors
A solid checking account with an APY that far outpaces the competition. The fact that it also has no maintenance fees and no overdraft or NSF fees are the cherries on top.
Rewards Checking disclosure:
To be eligible to earn all or a portion of the cash incentive as part of the promotional offer "RC500," an application for a Rewards Checking account must be submitted between 06/20/2024 at 12:00 am PT and 07/31/24 at 11:59 pm PT.
Axos Bank reserves the right to limit each primary account holder to one (1) checking account promotional offer per year. Promotional terms and conditions are subject to change or removal without notice. Incentive may be taxable and reported on IRS Form 1099-MISC. Consult your tax advisor. After initial requirements above are met, the amount of incentive earned will depend on meeting the additional requirements outlined below:
Rewards Checking bonus up to $500: You must be approved for your new Rewards Checking account and fund it within 60 days of account opening. An incentive of up to $500 can be earned during the first six (6) statement cycles, starting in the statement cycle thirty (30) days after the account is opened. A statement cycle is a calendar month consisting of at least one day your account was open during that month. You can earn a maximum of five (5) payouts during the six (6) statement cycles, and the incentive will be deposited into the qualifying account within 15 business days following the end of the statement cycle in which the requirements were met.
$100 will be earned for each statement cycle, up to $500, when you meet two requirements during that statement cycle: 1) your Rewards Checking account receives qualifying direct deposits at least $1,500.00 in total, and 2) the average daily balance in your Rewards Checking account is at least $3,000.
Your Rewards Checking account must remain open and in good standing at the time the incentive is paid to be eligible.
A direct deposit is an electronic deposit of your paycheck or government benefits, such as Social Security, Disability etc. Other deposits (i.e., online banking transfers, ATM and mobile check deposits, etc.) or person-to-person payments are not considered a direct deposit. Account transactions may take one or more business days from the transaction date to post to the account.
Here are some account highlights:
- Commitment to no fees: Axos Bank won't charge monthly account fees or overdraft protection fees.
- ATM fee reimbursement: Axos Bank will pay you back for all domestic ATM fees, no matter what network.
- Earn interest on your balance: You can earn 0.40% (up to 3.30%) APY on your account balance. Bear in mind that you'll need to receive at least $1,500 in monthly direct deposits to qualify for the base rate and activate the higher APYs. After that, the more boxes you can check, the higher the APY you can earn. Boxes include using your debit card for more than 10 monthly transactions, or using certain investment and loan products.
- Welcome bonus offer: If you open your account before July 31 and use promo code RC500, you might be eligible for up to $500 in welcome bonus payments. The catch is that to qualify, you'll need to receive at least $1,500 in monthly deposits and maintain an average balance of $3,000. You'll get $100 for each statement cycle (up to five) when you meet these requirements in the first six cycles after account opening.
- Early direct deposit: You might be able to access direct deposits, such as your paycheck, two days before the payment date.
3. Ally Spending Account
Like the other accounts listed, you can rely on the Ally Spending Account to help you avoid bank fees. It's got some great people-focused tools that make it easy to pay bills, get cash, and manage your money. I'm a big fan of the ways it can help you save. For example, you can opt to automatically round up your spending to the nearest dollar and put the money into your savings.
Here are some other reasons to consider this account:
- Commitment to no fees: Ally won't charge monthly account fees or overdraft fees.
- Overdraft cushion: Not only does Ally not charge overdraft fees, its CoverDraft service gives you a safety net of up to $250. So you don't need to worry about an automatic payment accidentally taking your balance below $0.
- Savings buckets: Ally will help you stick to your budget by allocating your money to different buckets -- like an online envelope budgeting system. It's a great way to track your spending.
- Early direct deposit: You can access your money up to two days early if you set up direct deposit.
- ATM network: You can access over 43,000 Allpoint® ATMs for free. Ally will also reimburse up to $10 in out-of-network ATM fees each statement cycle.
The right bank account can save you money
There were almost 6 million households without access to a checking or savings account in 2021, according to the FDIC. Many are low-income households. Some are nervous about meeting minimum balance requirements or having to pay unexpected fees. When money is tight, it's natural to be cautious. Particularly if you've been stung in the past or heard horror stories about overdraft fees that snowball into hundreds of dollars' worth of costs.
But not only are some bank accounts serious in their no-fee commitments, there are also protections in place to ensure they keep their word. On top of which, living without a bank account can be costly. Money orders and cashing checks will all eat into your budget, and a good checking account will do all that for free.
If you don't currently have a checking account -- or have one that's charging you hefty fees -- it could be costing you $100 a year or more. Take a look at the accounts above or our top free checking accounts and cut the cost of everyday banking.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.
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