Why it’s a good idea to have (at least) three checking accounts (and which ones to have)

While I try to keep this site mostly focused around cheap travel, it’s a lot easier to travel often with more money.

Most people I know have experienced at least one of the following annoyances somewhat recently with their checking account:

1. You couldn’t find your bank’s ATM, so you used another one and got slapped with huge fees.
2. You thought you’d solved #1 with the new hip internet bank you found, only to come across a lot of cash and realize there was no way to deposit it.
3. As you prepared your taxes (or gathered the necessary forms together), you realized that the amount of interest you earned last year in your checking account couldn’t even buy you one meal.

The truth of the matter is, there’s really no one checking account that solves all these problems (unless you are extremely wealthy, but I’m not going to address that here).

For many years, I had a checking account with Bank of America that I had set up when I was 18 to get free student checking. The terrible interest rate always frustrated me, but because I always lived near a Bank of America ATM, it never frustrated me enough to switch.

As I began traveling internationally more and more, ATM fees started to annoy me more and more. I finally hit my breaking point when I noticed Bank of America had assessed me a fee when I made a withdrawal at a China Construction Bank ATM in Chengdu, China, which I was told would not charge me a fee because of Bank of America’s partnership. As it turns out, what that really meant was that Bank of America would not charge me a fee for using another bank’s ATM, nor would the owner of the ATM (China Construction Bank) charge me a fee for using a foreign bank. However, I was still charged a foreign transaction fee because I was making a withdrawal at an ATM outside the US.

This is why it is important to read the fine print when looking at checking accounts; you not only want a bank who will reimburse your out-of-network ATM fees, but one that won’t charge you if you make a withdrawal abroad.

However, the reality of it is that you shouldn’t look too hard if you’re searching for a bank account designed for travelers, because the best one by far is Charles Schwab.

Why?

-Accepted at just about every ATM worldwide. So far, I’ve successfully used mine in 16 foreign countries, some of which have extremely limited financial networks (like Bhutan), and never once had it declined (other than in Cuba, for obvious reasons, though even this will likely change soon).

–Unlimited ATM fee reimbursements. Offering to refund ATM fees is getting very trendy among smaller to midsize banks, but most of the time, they will only reimburse a certain amount per month (usually up to $15 to $25). Now, this generally isn’t a problem if you’re in the US, but if you’re doing extended travel internationally, you can easily have more than $25 worth of ATM fees in a month. I came very close last year after being away for all of June.

-Excellent customer service. In addition to being available 24/7, they have a collect number which you can call internationally and they will pay your charges. On top of that, if you lose your ATM card (as I did last year on the first day of a two-month trip last year), they will send you a new one within three business days to almost anywhere in the world for a $15 fee (in my case, Thailand).

So that solves problem #1 above. However, as Charles Schwab has no true physical bank locations (although they do have service centers in major cities), there is nowhere that you can deposit cash into your account. Again, while this generally isn’t much of an issue in our society that is moving more and more away from cash, there might be a time when you have a large amount of cash with you which you don’t feel comfortable walking around with (or storing), from perhaps a dinner where you put everything on your credit card and everyone else gave you cash. This is why it’s good to have a bank that has their own ATMs which you can deposit cash into (and then later transfer to your primary checking account).

For this, I personally like Capital One, as they have locations in all major US cities, and have no monthly fees of any sort (on top of that, you can use a Capital One debit or credit card to get half of your drink order at a Capital One Cafe). However, if your particular area is not well-served by Capital One, you might want to look into other options (though you might end up having to choose between a local bank with not many locations across the country, or a national bank which will charge you monthly fees for not maintaining a certain amount). You also might be able to get a nifty signup bonus if you apply inside one of their cafes.

After a particularly successful blackjack night in Vegas a few months ago, I found myself with $500 in my pocket, all in hundred dollar bills. Thankfully, after getting off of my flight back to Boston, I was able to go straight to a Capital One location and deposit the money, after which I then transferred it to my Charles Schwab account.

However, as much as I love my bank accounts with both Charles Schwab and Capital One, neither of them are particularly great for earning any interest, as Charles Schwab offers an interest rate of 0.06%, and Capital One is only slightly better at 0.2%. In other words, for every $10,000 in your Charles Schwab account, you’ll earn $6 at the end of the year (though this still is far better than the 0.01% offered by many major banks, yielding you a nice $1 for every $10,000 in your account).

Luckily, there are many small banks that have been very aggressive at bringing on new customers by offering sky-high interest rates. One in particular that has been getting a lot of headlines lately is the new Ultimate Account from Northpointe Bank, offering 5% (yes, 5%!) APY on balances up to $5,000. Although in order to get this, it does require at least 15 ATM transactions per month of at least $500, as well as direct deposit of at least $100 per month.

However, given how often I’m trying to meet credit card minimum spend requirement in order to earn bonuses, I opted against this one, not sure if I would be able to fulfill the ATM requirement. Instead, I opted for another account from a small local bank with an APY not quite as high, but a less stringent requirement for ATM transactions.

Now, I’m not necessarily recommending this for you. Depending on your situation as well as how much effort you want to put into it, you can earn 5% on your first $60,000 and 3% on your next $35,000, as the amazing website Doctor of Credit recently laid out. Furthermore, while every bank account I’ve mentioned so far in this post is available to you regardless of where you live in the United States, there may be other banks near you offering amazing rates only available to local residents (for example, if you live in Louisiana, you can get 4.11% APY on up to $15,000).

More importantly, this post is not intended to be financial advice regarding what kind of financial accounts you should have and how you should allocate your money among them. Obviously, I am not recommending you put all of your money in checking accounts, as the stock market will almost always yield a better return in the long-term.

But if you’re going to have a checking account (or a few), you might as well get all you can out of them.

Did I miss something? Feel free to email me or post in the comments.

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