How free is your free checking?

Recent regulatory changes to the way banks can charge fees with respect to their credit cards and debit cards, as well as overdraft fees, might mean your free checking account isn't so "free" anymore.

After all, banks are in business to make a profit, and if they lose the ability to charge fees in one area (in this case credit and debit cards) they will either cut services or find other ways to replace that income. One way they may do the latter is by adding fees to formerly free checking products.

What's changed?

Two federal regulations are changing the way banks charge fees. First is the Credit CARD Act of 2009, which instituted sweeping changes to the way banks can levy fees to customers, everything from when and how banks can charge credit card fees to the way banks can describe credit card products to their customers.

The second was a change to overdraft fees. Or, more specifically, a change to overdraft coverage.

Legislation signed into law in July 2010 requires banks to provide overdraft coverage as an option. For those who opt out of overdraft coverage, banks can't charge fees for paying an overdraft that occurs because of an ATM transaction or a one-time debit card transaction unless the customer agrees.

These changes could cost banks billions of dollars. With the loss of fees, it is probable that banks will want to find other ways to make up for those revenue losses. Free checking accounts, which so many Americans have enjoyed for years, are a tempting avenue for banks to take.

How will my checking account change?

The ways in which any free checking account will become less "free" will depend on each financial institution.

Likely changes, however, could include a slew of new "free" checking products, many tied to an interest rate or a high yield savings account. Getting paid that interest rate, however, will depend on you meeting certain product obligations. Those obligations could include minimum debit card usage or use of online banking--with fees incurred if you use too many traditional checks.

And there is some speculation that free checking accounts could be truly bare-bones products, allowing you access only to online banking and not to ATMs or drive-up service, for example.

How do I pick a good free checking account?

Make no mistake, you can still get a good free checking account at most major banks and smaller financial institutions. Just make sure you read the fine print and know everything about your account before you sign on the dotted line.

• Check the minimum balance requirement. The smaller your regular balance, the more likely it is that you will be charged a fee. Make sure you know how much you can maintain and whether that's enough to stay "free."

• Count up your transactions. Will you conduct enough transactions to waive checking account fees? And how much will you pay if you don't reach that minimum?

• Debit or credit? Most debit cards can be run as a credit. Make sure you know if there are any fees associated with running your ATM card either way. Chances are, you'll be encouraged - via fees - to use your card one way or another based on what best serves the bank.

• ATM fees. What are the fees for using teller machines outside the network? And, for that matter, is the bank's network large enough to serve your needs?

• Outweighing interest? If you keep a high enough balance in your checking account, there is a chance that the interest you collect will outweigh any fees that you are charged. It's a long shot, but worth investigating.

It's worth asking yourself, "How free is my free checking?"