What to Know to Choose the Best Checking Account for You

What to Know to Choose the Best Checking Account for You

You can’t drive through most cities without seeing big banks, like Bank of America, Chase and BB&T. These wealthy financial institutions have the money to advertise, so you see them while watching TV and when crowding into professional sports stadiums named in their honor. They do such a great job of branding that you probably think of them first when you consider opening a checking account.

What you may not see so readily are the mid-sized and small banks popping up throughout the country. Think about your city or the large cities nearby. Can you name the small banks and credit unions? Do you know where they’re located? Even if you do know where the smaller banks are in your area, you may overlook them when shopping for a checking account, due to the assumption that you’ll get the best deal with a larger, more established bank.

According to one study of banking data, this assumption is the opposite of reality. This study found that the largest banks typically offer the lowest interest rates. The research found that the average annual percentage yield or APY offered by small banks is nearly double the average APY offered by larger banks. Interestingly, mid-sized banks and credit unions came out as the winners, with the highest averages of all.

If you’re ready to switch checking accounts or need to open a new one, keep reading. We’re going to introduce you to some of the most competitive small banks fighting for your attention and willing to reward you with better interest rates than the bigger competition.

La Capitol Federal Credit Union

Credit unions offer a friendlier, more intimate banking experience. That’s definitely the attitude of this small federal credit union, located in Louisiana. Like a co-op, credit union members are also owners, which means that they can vote on the board of directors and other matters that dictate the future of the credit union.

As with many credit unions, you can’t just walk into a La Capitol Federal Credit Union location and open an account. You need to qualify for membership first. If one of your immediate relatives is already a member, then applying as their relative is the fastest way to get approved. There are also ways to qualify for membership through affiliation with certain local groups or through your employment with the State of Louisiana.

There are four types of checking accounts offered by La Cap, and you need as little as $50 to establish a new account. There is no minimum account balance for most of these accounts, but you may have to pay a small monthly service fee on some accounts. Only the All Access Advantage and Liquid Assets accounts earn dividends, but you can request overdraft protection on all account types.

For the All Access Advantage checking account, you can earn dividends with an APY of at least 4.25%, and there are ways to push that percentage a bit higher. For the Liquid Assets account, you earn daily dividends if your balance is over $2,500.


  • Members are treated like owners rather than numbers
  • Only need $50 to open a new account
  • No minimum account balance
  • 4.25% APY or higher


  • Not everyone will qualify for membership
  • Monthly service fee up to $10 on some accounts
  • Not all checking accounts earn dividends

One American Bank

If you live in South Dakota, you may have known this bank under its previous name, Bank of Centerville. It has been in operation for more than 100 years, but has only operated under this new name since 2011. In addition to providing service to locals through two branches in Sioux Falls and one in Centerville, they now offer online banking. This means that you don’t need to live in South Dakota to take advantage of their free checking accounts that pay up to 3.5% APY.

There are three checking accounts offered by One American Bank, and two of them require no minimum balance. They will also refund ATM fees of up to $25 each month, which could save you a lot of money if you don’t live close to one of their branches.

The Kasasa Cash® account is the most impressive, with an APY up to 3.5%. With the Kasasa Cash Back® account, you earn cash back when using your debit card. You’re reimbursed up to 3.5% of all debit card transactions, and there are no restrictions on where you swipe your card. Regency Checking is the One American checking account for senior citizens. It does pay interest, but you have to maintain a balance of at least $1,200 and the interest rate isn’t readily disclosed.


  • Up to 3.5% APY
  • Refunds for ATM fees
  • Online banking offered
  • No membership restrictions


  • Not all checking accounts earn dividends
  • Senior citizen account requires a high minimum deposit and minimum balance

Consumers Credit Union

This Michigan-based credit union distinguishes itself by offering 19 branches throughout the state, plus more than 30,000 fee-free ATMs throughout the country. They accomplish this by joining a credit union co-op that allows a group of unions to maintain shared ATMs for their members. While many credit unions force you to do all of your banking locally or pay fees, you can find Consumers ATMs even when traveling across the country.

Consumers Credit Union branches are modern facilities that offer free document shredding, Wi-Fi, computer access for online banking and other perks of membership. Members also benefit from discounts and deals with select corporate partners, including TurboTax and Sprint.

While membership isn’t open to just anyone, the eligibility requirements are far more relaxed than those of most other credit unions. If you’ve attended community college or university in Michigan’s lower peninsula, or you can prove church affiliation or other connections to the area, chances are high that you’ll qualify.

This credit union keeps it simple when it comes to checking accounts. They offer a free, simple checking account and an interest-bearing checking account. While there is no minimum balance requirement, your APY will depend on your running balance. You will earn as little as 0.15% APY for a balance below $1,000 or as much as 0.40% APY for a balance over $25,000. There are different interest rates for balances between these two extremes, and the APY rates are equal to the interest rates.


  • 30,000+ ATMs nationwide
  • Up to 0.40% APY
  • Corporate discounts with partners


  • Membership is restricted
  • $10 monthly fee charged for balances below $1,000

Lake Michigan Credit Union

This is another credit union hailing from the lower peninsula of Michigan, but select counties beyond this region are also included. The membership requirements are similar to those of the Consumers Credit Union. If one of your immediate family members is a member or you have attended a church or institute of higher education in the area, you’re likely to qualify. You can also obtain membership if you donate to the Amyotrophic Lateral Sclerosis (ALS) Association, West Michigan Chapter.

This credit union has roots back to the early 1930s, so they are just as well established as many big banks. They are also the largest credit union in Michigan, and they’re quite competitive when it comes to their checking accounts. While there are no minimum account balances to maintain, some accounts will only pay interest if you maintain a high balance.

The basic free checking account doesn’t pay interest, regardless of your balance. The Max Checking account is the most popular and offers an APY of 3% for all balances up to $15,000. You don’t earn any interest on money deposited above this maximum balance. The Investor Checking account offers an APY of up to 0.35%, but you must maintain a balance of at least $2,500 to earn.


  • Largest credit union in Michigan
  • Mortgage office in Florida
  • Up to 3% APY


  • Membership is limited
  • Some accounts require high balance to earn interest

Signature Federal Credit Union

If you like the idea of joining a credit union but don’t meet the location-based requirements for most of the best options, you may have an easier time getting in with Signature Federal. This union has federal reach, rather than limiting service to one state or region. You can apply for membership online, and you will only need to deposit $5 into a savings account to establish your membership. There are no minimum balance requirements or membership fees beyond that initial $5.

High-yield Choice Checking is the account that you want, in order to maximize yearly earnings. This account offers an APY of 3% for balances up to $15,000. You will earn just 0.01% APY for any portion of your balance above $15,000. ATM/Rewards Choice Checking is a different account type that only rewards you with 0.10% APY, but it comes with added rewards that aren’t offered through the high-yield checking account. Other options include the standard checking account or the Legacy account, which offer 0.10% and 0.20% APY, respectively.


  • Members are treated like owners, not customers
  • Only need $5 to establish membership
  • No minimum balance requirements
  • No membership fees
  • More inclusive than most credit unions
  • Up to 3% APY


  • Must choose between higher APY and ATM reimbursement rewards

Evansville Teachers Federal Credit Union

This credit union was established in Evansville, Indiana, in 1936, when a group of teachers put their money together to help fund the dreams and goals of fellow teachers. They now have branches in Indiana and Kentucky, but membership isn’t limited to these states. There are no strict eligibility requirements, and membership isn’t limited to teachers.

You must pay $5 into a savings account to establish membership at this credit union, and you remain a member as long as you maintain that low balance in your savings account. The union is a member of the Alliance One ATM network, which allows members to use ATMs around the world without paying a fee. This makes it easy to bank with ETFCU regardless of where you live.

A Vertical Checking account will deliver an APY of 3% on balances up to $20,000. The Platinum Rewards checking account doesn’t pay interest, but it offers rewards for your spending habits. Both of these accounts require no minimum balance and come with no service fees. Mobile and online banking is provided, so you don’t need to live near a branch.


  • No strict membership requirements
  • Fee-free ATMs worldwide
  • Only need a $5 deposit to join
  • 3% APY


  • Interest is limited to balances under $20,000

Great Lakes Credit Union

This credit union has been around since the late 1930s, so it’s a good pick if you prefer well-established financial institutions. Other than a minimum age limit of 18, there are no strict eligibility requirements to become a member, and you can start by opening a savings account online. They do require in-person appearance at a branch to open many other types of accounts, so this isn’t the most convenient banking option if you live outside of Illinois.

The Ultimate Checking account offers an APY of 3% only if you receive at least $500 per month in direct deposits, sign up for electronic statements, log into your mobile banking account at least once per month and make a minimum of 10 purchases on your debit card that total at least $100. If you don’t meet those requirements, you won’t receive the interest payments and may have to pay a $5 monthly fee. Club checking accounts are available for members with combined balances of $50,000 or more, or who are at least 60 years of age.


  • No strict membership requirements
  • 5,000+ ATMs nationwide
  • 3% APY


  • Branches limited to Illinois
  • Strict qualifications to earn interest on checking

CapEd Credit Union

This is an Idaho-based credit union that was established to help teachers meet their financial goals. It has a legacy that goes back more than 80 years, and the institution maintains a local focus to this day. In order to qualify for membership, you must work or volunteer in some capacity for an educational facility within the state of Idaho. If a close family member meets that qualification or is already a member, then you may also join easily.

The CapEd High-Yield Checking account is the best option if you’re interested in earning interest. The APY is 2.5%, and you’re never required to maintain a minimum balance. There are no monthly service fees, and the credit union will refund up to $25 in ATM fees monthly. The catch is that you must receive at least one direct deposit and complete 12 transactions with your debit card each qualification cycle, and you must maintain membership in online banking while receiving electronic statements. Without meeting those qualifications, you won’t receive the interest payments.

You can also opt for the Tunes checking account, which rewards you with iTunes or Amazon credits, but it doesn’t pay interest. The Idaho MSA checking account is limited to medical spending and delivers an APY of just 0.05%.


  • Monthly ATM fee refunds
  • Up to 2.5% APY


  • Membership is limited to Idaho residents with connections to the education field
  • Strict qualifications to receive interest on checking

Which One Works For You?

Use the information in this article to select the best checking account for your financial needs. You may see signs and advertisements for larger banks all over, but don’t assume that they’re going to offer you the best deal. The smaller banks and credit unions usually extend better rates to attract new customers, so use the competitive nature of the banking industry to your advantage.

Notice that not all banks and credit unions on this list will suit the needs of every consumer. Some have strict location-based requirements, while others demand a checklist of qualifications to earn interest and still others cap the balance on which you may collect interest. Think about your location, banking habits and the amount of money you tend to keep in your checking account when making your final decision.