Which bank offers the best deal on checking accounts?

How to be the best consumer you can be.
March 31 2009 11:43 AM

Battle of the Banks

Which checking account is best?

Illustration by Robert Neubecker. Click image to expand.

When I moved from Cleveland to New York just over a year ago, I closed out my checking account with Huntington Bank, a regional institution, and opened a new one with Chase. I'm not exactly a high roller, so it never occurred to me that I could play the field, pitting banks against one another to get a better deal. I just went for a basic checking account at a national institution. My financial situation hasn't changed much over the past year, but the world's sure has. Next to Wall Street's huge red blots of government debt, my slender margin in the black suddenly looks pretty good.

So I set out to investigate whether a solvent potential client such as myself could finagle a sweet offer from once-mighty, now-fallen, financial institutions. Will customer service reps compete for my attention? Is Chase willing to do whatever it takes to keep me from leaving?

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My banking needs are bare bones: No mortgage and none on the horizon, I use my debit/credit card for nearly every purchase, and I usually write just one check per month (for rent). I have a separate online savings account with HSBC that suits me just fine. What I'm on the hunt for, then, is the elemental checking account experience: The simple black dress or chocolate chip cookie of the financial industry. If a bank can do this well, perhaps it's an indication of overall competency. (Before you shake your head at my naiveté, remember that fancy financial instruments haven't served the industry well.)

I have three requirements. First, of course, I'm after convenience. Lower ATM fees are key, and so are branch and ATM density. Second, as a shortsighted young person, I'm heavily influenced by the toaster factor. Last year, Chase gave me a free iPod Nano; it was entirely superfluous to my needs and I gave it away immediately, but I like shiny things and it sealed the deal. I understand times aren't quite as flush, but, come on, lavish a little something on me. Third, just to make you shake your head at my callow superficiality, I'll admit that the optics of the banking experience are important to me. I like a well-appointed Web site, an attractively designed debit card, and brick-and-mortar banks that evoke just the right level of corporate soullessness.

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Bank of America I started my search with Bank of America, one of Chase's biggest rivals (and one of the biggest TARP beneficiaries). An efficient greeter with a clipboard welcomed me as soon as I walked through the door, then passed me along to a gentleman I'll refer to as F. (for decorum's sake), a personal-banking specialist with a flag pin, slicked-back hair, and a professionally flirtatious gaze. I briefly explained my reasons for stopping by that afternoon, and F. bored his eyes even deeper into mine. "What do you really want from a bank?" he asked, a simple question for which I suddenly had no answer. "I just want to see what's out there," I said, then started rambling about how I hate carrying cash—a rotten but unshakable habit—and constantly find myself paying $4 non-Chase ATM fees to get $1.50 coffees at cash-only bodegas.

F. took this all in, nodding slowly as I talked with increasing speed and decreasing substance. Then, with a sidelong glance, he casually popped the question: "How much money do you normally keep in your bank account?" I felt so … exposed, but once I croaked my answer, the awkwardness subsided. F., that gracious soul, showed no signs of judgment and proffered a wealth of pamphlets. (He did quickly dismiss some of the higher-end options with "Oh, you don't need to worry about these!")

Bank of America's regular checking account is virtually identical to Chase's: free online banking, free check card, and a low minimum balance that's waived if you sign up for direct deposit. If you use another bank's ATM, you get slapped with a $2 penalty, plus the machine fee. There are more than 18,000 Bank of America ATMs nationally (14,000 for Chase), so both are more than adequate for my mobility and convenience requirements. The main difference between the two banks is that overdraft charges are assessed on a per-diem basis at Chase, and in a single lump sum at Bank of America. But since I've never overdrafted, that's hardly a reason to jump ship.

Deals abound for the consumer interested in squirreling his money away in various CDs and money-market accounts, but there's virtually nothing for me, the relentless spender who represents the salvation of our national economy. The "Keep the Change" program is enticing: It rounds up any check-card purchases to the nearest dollar and deposits that difference to your savings account. But in the long run, Bank of America's low interest rate (0.3 percent) won't match up to HSBC's.

On the aesthetic front, Bank of America and Chase are, again, quite similar. These fierce competitors are united in their appreciation for the anodyne—unmemorable standard checks and inoffensively bland physical branches. I do prefer Chase's calming blue color scheme to Bank of America's bullfighting red, which, to the pop color theorist might indicate risk aversion.

F. gamely tried to sell me on the bells and whistles: low-balance alerts texted to my cell phone, new ATM check-scanning technology being installed all over New York, themed debit cards with everything from camo to Anne Geddes! (Clearly he'd misread my taste.) The best F. could offer on the toaster front was a $25 cash gift if you maintain a certain balance for your first month as a customer, not exactly dazzling even in this new era of restraint. Finally, F. pulled out his ace: In his profligate youth, he was a Chase customer. And although the two institutions seemed comparable, online banking was "more intuitive" with Bank of America. He was right to peg me as an intuitive decision-maker, but in this case my gut wasn't feeling it. I left with his card and an empty promise to call him soon.

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Apple Bank My next stop was Apple Bank, a hyper-local New York institution. Perhaps it was nostalgia for my Cleveland bank or a reaction to scary headlines about the big conglomerates, but locavore banking suddenly seemed like an appealing option. (I'm not alone in this sentiment; both credit unions and local banks have been picking up skittish customers.)

I had visions of Jimmy Stewart welcoming me with a handshake, but at the branch I visited, things looked more like Potterville. The chairs were dirty, and the décor evoked a 1970s-era principal's office. No one greeted me at the door; instead, I sidled up to jeans-clad S., one of several desk workers who hadn't even glanced at me when I walked in. After I said my piece, she slapped a photocopied, text-only printout on the table and told me to look it over. For a brief moment, I felt ridiculously snobby—do I really want wasteful glossy brochures, silly suits, and corporate jargon-filled fawning? But then I read the dinky sheet of paper and learned that not only would I be assessed a charge for online bill payments (a service I take for granted), but that after signing up, I'd have to submit a cancellation request in writing.

I pressed on, only to find numerous service charges. For a basic checking account, Apple slaps you with a $3 monthly maintenance fee regardless of your balance and permits only 8 free withdrawals per month. Even S. shrugged when I asked her why I ought to switch to Apple. She admitted that the ATMs were few and far between (and nonexistent outside the New York City area) but added sullenly that customer service was great.

As I got up to go, astonished that such an institution could possibly flourish, S.'s parting line reminded me why it does: "We are a good bank, a solid bank, no subprimes."

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E-Trade After my Apple experience, I considered the dramatic move of abandoning the traditional brick-and-mortar bank entirely by switching to etrade.com, the online brokerage that also offers checking accounts. All deposits earn interest at a rate of .05 below $5,000, and an impressive .75% for accounts above that amount. Minimum-balance fees are waived with direct deposit, and, holy of holies, all ATM fees are reimbursed. No more $5.50 coffee! But E-Traders have to give up certain simple pleasures, like haggling with a customer service rep in person.

Plus, depositing money is a hassle—you have to mail a check, wire funds, or transfer from another account. To keep my perfect overdraft-free streak going, I need checks to pop up in my account immediately. Sure, I can use direct deposit for my biweekly paychecks from Slate, but what about freelance gigs? Or birthday checks? I may be a child of the Internet age, but I'm not quite ready for E-Trade.

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Citibank The morning after word got out that Citibank might be nationalized, I moseyed on by a branch near my office. When I informed the greeter that I was shopping around for a new checking account, she looked me up and down and then demanded photo ID, a copy of my Social Security card, and other official flotsam. Much as I enjoyed this Soviet-style greeting, I was relieved when she hustled me into the arms of M., her slightly more affable young comrade.

M. lacked F.'s velvet-gloved killer instinct, but he did a fine job selling his product. He whirled me through a dazzling array of "packages" (accounts, for the layman) before delicately nudging me to reveal my net worth. I appreciated his sensitivity and quelled the wild desire to name a fantastic sum. He steered me toward the same basic package I'd seen at the other behemoths, one which serves my needs adequately but lacks zing. Citi has fewer ATMs nationwide than its main competitors, but the ATM fee is just $1.50—lower than the $2 charge at either Bank of America or Chase.

Still, I pushed for more—a toaster? Perhaps a recession special? M. laughed at both suggestions. Then, to mollify my hurt feelings, he began describing "Thank You Points," Citi's check-card reward system that—at my expenditure level—results in the adult version of carnival stuffed animals. Citi's debit card also has a program offering frequent-flier miles—but for an airline I dislike.

Just as I was ready to leave, M. offered to check whether my employer has a relationship with Citi. As it turns out, as an employee of the Washington Post Co., I'm eligible for a slightly nicer checking deal, one that normally requires maintaining a $6,000 minimum balance. The main advantage, at least for me, is that the bank waives non-Citi ATM fees. Bingo! (Here it should be noted that other large banks have a similar deal with various companies. At Bank of America, F. searched valiantly for a corporate discount on my behalf, but ours was a star-crossed relationship.)

I headed to the Chase bank across the street to see if they'd be willing to match the deal I'd gotten at Citi. It was crowded, and I ended up waiting for half an hour to see a customer service rep. Would they have paid a little more attention if they'd sensed my potential betrayal? When I finally got in to see a representative, I laid out the terms of the Citi offer and asked if she would be willing to match it to keep my business. She laughed, and told me nope, no way. I must have looked a little sad. "Honestly?" she added. "That's a really great deal." It was tantamount to a blessing: Chase understood that I'd be better off with someone else.

I haven't quite worked up the oomph to switch banks yet—inertia is a powerful force, paperwork is a hassle, and I'm a little leery of handing over all my hard-earned cash to such an unstable institution. But my rational side knows that Citi is, as they say, too big to fail. And if Citi does go under, at least there are plenty of brick-and-mortar branches countrywide where I can bang on teller windows and demand my money back.

Noreen Malone is a senior editor at New York magazine.

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