You can thank millennials for your free checking account

Just as quietly and mysteriously as it began, America’s antipathy for millennials disappeared.

After years of trend pieces about “Generation Broke,” Gen Y has risen above its festering reputation. Why? Quite simply, millennials are better with their money than you are. They save fastidiously, contribute to their 401(k)s and think things like “Am I going to be house poor?” — which isn’t exactly groundbreaking but also isn’t something a lot of Americans concerned themselves with a decade ago.

With all the buzz about what millennials are in the process of changing forever — the wine industry, for one, the work place, the Republican party — it’s no wonder that this generation has already left its mark on consumer banking.

Most people are wrong about millennials’ biggest contribution to the financial space. They assume it’s a dip in mortgage originations or the popularization of mobile banking.

Both are true — but there’s one banking product that millennials have actually saved from the brink of extinction, without even realizing it: the free checking account.

It doesn’t look exactly the same as it did five years ago. You probably won’t be writing checks or visiting a branch to deposit cash. But if you’re OK moving most of your checking online, you’ll likely be able to avoid fees completely.

Why the Free Checking Account Disappeared in the First Place

Don’t get too excited; free checking accounts are still relatively rare at national banks, and have been for half a decade. Back in 2009, 76 percent of all noninterest checking accounts were free; these days, that number is closer to 38 percent, according to The Associated Press.

This is because, in the year following the financial crisis, the federal government started to regulate one of the biggest cash cows for national banks: fees. For the first time, banks were limited in how often they could charge overdraft fees and how much they could penalize merchants for debit and credit card transactions.

To make up lost ground, financial institutions began to the raise the dollar amounts of ATM and overdraft fees. The “$35 cup of coffee” became a thing; Americans were spending almost as much on overdraft fees as on household appliances, according to the Center for Responsible Lending. And, of course, fewer and fewer banks offered completely fee-free checking accounts.

How Millennials Treat Checking Accounts Differently

Young people don’t generally write checks. Gallup found 72 percent of millennials use online banking services weekly – compare that to the 21 percent of Gen Yers who have never paid a bill with a check in their lives, according to a Western Union study. Meanwhile, 64 percent of millennials receive at least half of their bills electronically.

Despite this disdain for traditional checking features, Gen Yers tend to keep a fair amount in their checking accounts. This might be because they have more debt than other generations, and therefore more monthly bills to pay, according to a 2014 TD Bank survey. With an average balance of more than $2,240, millennials are one of the more liquid generations: somewhat behind boomers ($3,447) but ahead of Gen X ($2,081).

Because of this high liquidity — a combined $2 trillion, per Forbes, and $7 trillion by 2020 – millennials are pretty attractive customers for financial institutions. Not to mention, banks and credit unions are looking to snap up younger consumers now so that by the time they’re ready to buy a car or a home, they’ll have some brand loyalty.

Millennials are, in short, kind of a big deal, and financial institutions are bending over backwards to accommodate them. Luckily, when banks court Gen Y, everyone else wins, too.

Why Free Checking Came Back

Banks and credit unions are now rolling out a new breed of free checking: a digital account that only charges fees for more traditional transactions, like check writing and paper statements, according to The Financial Brand. Forgo these features, and the account will be truly fee-free.

It shouldn’t be too hard. Millennials are famous for being attached to their smartphones, but all generations are increasingly using online and mobile banking, and they seem to prefer it, too. A majority of boomers, for example, bank online, according to a 2013 Gallup study. Seventy-one percent bank online weekly, right in line with millennials.

Where to Find Free Checking

You’ll still want to look first to community banks and credit unions, which traditionally offer lower fees to their members; the caveat, of course, is that these institutions sometimes have restrictive member bases.

Navy Federal Credit Union is one cooperative that offers an e-Checking account — members of the armed forces (the institution’s purview) won’t pay monthly service fees as long as they set up direct deposit, and also receive ATM rebates up to $10 per month.

National banks are also beginning to offer these types of accounts, including Nationwide, Capital One and Mutual of Omaha. And if you skip brick-and-mortar institutions completely, a host of online-only banks offer free checking and, more often than not, they’ll reimburse ATM fees. Check out Bank of Internet or EverBank, to start. As long as they’re FDIC-insured, you’re good to go.

Take one last piece of advice from our famously cautious millennials: Read the fine print. Banks are required to disclose any dollar amounts they will ding you for, and a checking account isn’t completely free unless the bank says so, explicitly.

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