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Traditional checking accounts are designed for everyday money management, and come with checks and debit cards to make it easy to pay bills and make purchases. Checkless savings accounts work in a similar way, except without the checks.A checkless checking account can be a good option for someone who never writes checks, is just starting out in banking, or has had problems with bank accounts in the past and can’t qualify for a traditional checking account. But these accounts also come with some limitations.Read on for a closer look at how checkless checking accounts work, their pros and cons, and how they compare to regular checking accounts.
Checkless Checking Account vs Traditional Account
Checkless checking accounts offer an alternative to a traditional checking account by eliminating checks entirely. Instead, they rely on paperless payment options like debit cards and digital payments. They also typically do away with another common checking account feature — overdraft protection. This is a service that allows you to spend more than you actually have in your checking account but typically comes with hefty fees. Another key difference between traditional and check-free checking accounts is that the latter is typically easier to get approved for. Normally, when you apply for a checking account, the bank will look at your ChexSystems score. ChexSystems is a consumer reporting agency that collects and reports banking information. If you’ve had accounts involuntarily closed in the past, it can be difficult to get approved for a new checking account. Since checkless checking accounts don’t offer credit, banks generally don’t run a ChexSystems check before approving an account.Like a traditional checking account, check-free checking accounts may come with a monthly maintenance fee. And, though you can’t write checks against these accounts, you can still deposit checks, whether at a branch or through mobile check deposit.
Common Features of a Checkless Bank Account
While checkless bank accounts come with fewer perks and features than traditional checking accounts, they do offer a number of convenient features. Here’s a look at what you typically get with the account.
Debit Card
Debit cards, also known as checking cards and bank cards, allow you to make payments in person and online. When you use the card, money is debited directly from your checking account. You can also use debit cards to make cash withdrawals from ATMs.
FDIC Insurance
Checkless checking accounts are typically insured up to $250,000 per account, per account holder by the FDIC (Federal Deposit Insurance Corporation) at a bank or the NCUA (National Credit Union Administration) at a credit union.
Person-to-Person Payments
Like a regular checking account, you can link a checkless account to a person-to-person (P2P) payment app, such as Venmo. This gives you a quick and easy way to pay friends and family without having to carry cash.
Online Bill Pay
Checkless accounts allow you to set up recurring or individual online bill payments to service providers. Using the autopay feature can help you avoid missed or late payments.
Mobile Banking App
Checkless accounts typically come with a mobile banking app that allows you to manage your account from your mobile device. Mobile apps also typically allow you to deposit checks just by snapping a picture of the check.
Interest
Some checkless checking accounts pay a small amount of interest, typically expressed as an APY (Annual Percentage Yield). However, APYs on these accounts are generally lower than what you can get with a savings account.
Pros of Checkless Banking
Here’s a look at some of the advantages of opening a checkless checking account.
You Can’t Overdraft the Account
These accounts typically don’t offer overdraft protection. This can save you money in overdraft or non-sufficient fund (NSF) fees. It can also prevent overspending and help you improve your banking history.
Easier to Get Approved For
Since checkless checking accounts don’t offer credit, banks usually do not do ChexSystems checks when you apply for the account. If you've been denied an account in the past due to negative marks in your banking history, you might still be eligible for a checkless checking account.
Fewer Requirements
While traditional checking accounts often have opening deposit and ongoing balance requirements, checkless checking accounts generally have low or no minimum opening deposit or daily balance requirements.
Cons of Checkless Banking
There are also some drawbacks to checkless checking to consider.
No Paper Checks
Despite the popularity of electronic payments, having a checkbook can still come in handy. If you have a checkless account and need to write a paper check, you’ll have to do it through a separate bank account or by purchasing a cashier’s check or money order.
No Overdraft Protection
While this is listed as a pro, it can also be a con. If you forget to transfer money into your checking account before a scheduled bill payment and can’t cover it, the transaction will be declined. This can be a hassle and also lead to late fees.
Hard to Waive Monthly Fees
With checkless checking, the monthly maintenance fee may be harder to waive than it is for other types of checking accounts.
Who Should Consider Checkless Banking?
A checkless checking account might be a good option if you:
Have red flags in your banking history. These accounts typically don't require a banking credit check, making them easier to qualify for than traditional checking accounts.
Want to avoid overdraft fees. These fees tend to be high. And, you can potentially get hit with multiple overdraft fees in one day. (Keep in mind, however, that it’s possible to avoid these fees by opting out of overdraft protection in a traditional checking account.)
Don’t need checks. If you never have the need to write a check, or already have a bank account for writing checks and want to open another account to use primarily for debit card spending or bill payments, a checkless account could be a good option.
Are a minor or a parent of one. Since a checkless checking account has fewer features than a traditional checking account, it can be a good starter bank account. A teen can typically open this type of account jointly with an adult and may not have to pay any fees.
Who Might Not Benefit from Checkless Banking
A checkless account might not be a good choice if:
You still write checks. If you often, or even only occasionally, write checks (perhaps for rent payments, gifts, or other payments), a traditional checking account may be a better fit.
You like the security of overdraft protection. If you’re not someone who diligently checks their account balance and/or you like having extra backup in the form of overdraft protection, a checkless account may not be right for you.
The Takeaway
If you never write checks and are looking for a simple way to manage your money with minimal fees, a checkless checking account can be worth considering. It can also be a good option if you’ve been turned down for a regular account due to a negative banking history. On the other hand, if you still occasionally write checks and like to have the option of overdraft protection, you may be better off with a traditional checking account.Whatever type of bank account you’re looking for, it can be a good idea to shop around and compare checking and savings accounts offered by different banks and credit unions, looking carefully at features, terms, APYs, and fees.If you’re looking to get a better return on your savings, Lantern by SoFi can help. With our online banking marketplace, it’s easy to compare high-yield savings accounts based on APYs, fees, and balance minimums.Lantern can help you compare online savings accounts and find today’s best rate.
Frequently Asked Questions
Can you have a checking account without checks?
What can you do if you don’t have checks?
What can I use instead of a checking account?
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About the Author
Austin Kilham
Austin Kilham is a writer and journalist based in Los Angeles. He focuses on personal finance, retirement, business, and health care with an eye toward helping others understand complex topics.
