Best Checking Account Alternatives

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Most people stash money in checking accounts so they can access it on a daily basis. However, checking isn’t the only place to stash your money — and it’s important to know there are other options available. 

This article explores some of the top checking account alternatives on the market.

Top Checking Account Alternatives for 2021 

Unfortunately, not everyone qualifies for checking accounts. So if you want to experience the above benefits without a checking account, you might have to do some legwork.

Here are some common banking alternatives to consider in place of a checking account.

  1. Money market account
  2. Prepaid debit card
  3. Secured credit card
  4. High-yield savings account
  5. Brokerage account
  6. Cash on hand

1. Money market account 

A money market account is a type of deposit account that is kind of like a hybrid between a checking and savings account. Interest rates tend to be higher than traditional checking accounts, based on current interest rates in money markets. 

Money market accounts are low-risk, and they typically come with debit card access. However, they often have a six transaction per month limit, making them not ideal for everyday use.

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2. Prepaid debit card

If you’re having trouble opening a checking account due to issues with your credit card or banking history, you could always use a prepaid debit card. 

Prepaid debit cards are typically much easier to obtain than traditional bank accounts. You can get them from retailers like Walmart, which sells them over the counter. One of our favorites is the American Express Bluebird card.

A prepaid debit card works like a gift card. You simply tell the merchant how much you want to load onto the card and then you can use it as you would use a regular debit card. They can typically be used wherever Visa or MasterCard are accepted and some even come with select ATM access.

The amount you can put onto a prepaid debit card varies depending on the provider that you use. If you’re considering this option, be on the lookout for high fees. 

3. Secured credit card

Individuals who are trying to rebuild their credit might want to look into secured credit cards.

With a secured credit card, you have to deposit money up front to “secure” the account. Then, you can use the card to make everyday purchases, just like you would with a traditional debit or credit card.

The main difference is that you can only spend as much as you have added to your account, which is a valuable feature for those who tend to overspend on credit cards.

Secured credit cards can also be a great way for you to build up your credit score, which could lead to qualifying for a better checking account (or traditional credit card) down the road. 

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4. High-yield savings account (HYSA)

An HYSA is a type of savings account offered by online banks. This type of account typically comes with relatively high interest rates and an unbeatable APY that exceed what you’ll find at any traditional retail bank (e.g., Capital One and BBVA). 

HYSAs don’t typically come with debit card access, and you’ll be bound by Regulation D. However, it’s every bit as secure and reliable as a traditional savings account. And not all HYSAs require you to link a checking account, either. 

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5. Brokerage account

Speaking of investment accounts, another approach is to keep your money in a cash management platform within your brokerage account. For example, Personal Capital offers a cash management service. 

Some brokers allow you to write checks and pay bills against your balance, which can be a convenient way to store cash and invest right from the same place. 

Brokers typically put excess money into a money market account, giving you access to secure storage with higher interest returns than you would find at a traditional bank. The downside is that you most likely can’t use a debit card.

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6. Cash on hand

Keeping large reserves of cash at home isn’t recommended. But it is an option. Federal law does not require you to have a bank account. 

You won’t have to pay ATM fees, but you can forget about using convenient services like online bill pay and PayPal. 

If you decide to keep your money at home, first and foremost, you need to protect it. Make sure that your cash is properly sealed and stored in a hidden waterproof and fireproof safe. If your house burns down or someone steals your cash, you risk losing your money forever. Also, make a system to make sure you keep your cash safe from random and unnecessary spending as well.

TIP: I do not recommend keeping more than a few hundred bucks on hand at home.

Why Use Checking Accounts?

Checking accounts offer interest rates that are next to nothing, making them unappealing for long-term savings. 

However, they come with a variety of useful features, which make them a pillar in most consumers’ personal finance strategy.

Here are some of the top reasons that people use checking accounts:

ATM access

The U.S. economy hasn’t gone completely cashless, and it’s highly unlikely to do so any time soon. Cash is still useful for a variety of situations — like buying street food when you’re in a hurry, paying for parking, or tipping a valet driver. 

Checking accounts come with debit cards, which enable you to pull money from ATMs when needed. You can also use them at retailers, restaurants, and when making online purchases with vendors that support debit card transactions. 


One of the nice things about a checking account is that it’s very flexible. You can make as many transactions as you want during a monthly billing cycle without getting penalized — something that’s not possible with savings accounts due to Regulation D, which caps consumers at six monthly transactions. 

So, if you like to move money around, a checking account can serve as an appropriate vehicle.

Online banking access

Checking accounts typically come with mobile and online banking access, making it fast and easy to view your balance, transfer funds, deposit checks, and use other banking services. If you like having visibility and control over your money, a checking account can usually provide it.

Of course, not all banks offer the same level of quality for online banking. Make sure to select a bank that prioritizes the user experience. Find a service that’s easy to use and has a robust interface. 

Direct deposit

You can use a checking account for direct deposit as a way to securely funnel money from your employer to your bank. Direct deposit into a checking account is a convenient way to collect paychecks. 

One of the advantages of using direct deposit is that the money goes directly into your account. You won’t have to worry about cashing any paper checks and potentially misplacing one in the process. It’s completely seamless. 

You Got Denied a Checking Account: Now What?

If you’re reading this article, chances are the bank denied you a checking account and now you’re assessing your options. 

Fortunately, getting denied a checking account isn’t the end of the world. If a bank denies your request, you have the right to ask why.

Some of the top reasons for getting denied a checking account include: 

  • Excessive bounced checks
  • Too many overdrafts 
  • Concerns about identity theft
  • Opening too many accounts in a short time
  • Bad credit score

Once you figure out why the bank rejected your checking account application, you can take steps to remedy the situation. For example, look at your credit report and see if anyone has opened an account in your name, put fraudulent charges on a card, or taken out a recent loan. 

If the checking account was denied based on your behavior — like for excessive overdrafts — you can ask for a second-chance account. This type of account is a basic checking account that usually comes with fewer features, spending limits, and lower interest rates. 

Banks sometimes offer second-chance accounts to people who have closed down accounts with negative balances or those who have racked up unpaid fees.

Oftentimes, you can use a second-chance account to work your way back up to a regular account with standard features at a future date. 

Frequently Asked Questions

Are checking accounts from traditional banks worth it?

It depends on what you’re looking for in an account. Checking accounts from traditional banks typically have lower interest rates. However, they offer a lot of flexibility as they come with debit card access and the freedom to move money in and out of your account without restrictions. 

Checking accounts are fine for most consumers for daily spending and ATM access. If you’re looking for something that generates a better return, look into an HYSA from an online bank or a money market account. 

Are bank accounts secure?

Yes. When you open a checking or savings account from a certified bank, your funds are insured by the Federal Deposit Insurance Corporation (FDIC), which protects up to $250,000 worth of deposits. 

This is one of the best reasons for keeping your money in a bank account. Traditional banks can protect your money from a variety of risks, giving you the peace of mind that comes from knowing that your money is safe. 

Is cryptocurrency a good alternative for a checking account?

Investing in cryptocurrency is fundamentally different than using a checking account. 

Cryptocurrency is an investment — and a risky one because the market is so volatile, even more so than the stock market. Cryptocurrency is largely unregulated, and prices fluctuate on a daily basis. There are also many scams and coins with little to no value.

That said, cryptocurrency can potentially serve as a checking account alternative if you invest in a coin like Bitcoin, which is widely regarded as the most valuable cryptocurrency on the market.  

What’s more, many companies are now accepting Bitcoin as a form of payment. For example, Tesla recently announced plans to accept Bitcoin payments from customers. A growing number of retailers are now accepting crypto debit cards, which you can use to buy everyday items from participating establishments with cryptocurrency.

What’s a credit union?

Credit unions — or community banks — are similar to retail banks, as they offer traditional checking and savings accounts. The big difference is that credit unions are not-for-profit, meaning they work to serve the interests of their customers instead of their shareholders. Customers benefit from higher returns for deposit accounts and lower interest rates on loans.

To access a credit union, you have to be a member of a particular group through your community, church, or school. This type of financial institution is usually not available to the general public.

How much money should I keep in a checking account?

Since interest rates are so low, it doesn’t make sense to keep excessive amounts of money on hand in a checking account. 

The general rule of thumb is to only keep what you need in a checking account. For example, this may include your rent or mortgage, utility bills, or food expenses.

By keeping only what you need in checking, it can deter overspending and keep you on track with your budget. Plus, the bulk of your money can grow in your savings, brokerage, or tax-advantaged accounts. 

The Bottom Line

Only you can determine whether you should be using a checking account or another type of financial product. 

However, the truth is opening an online checking account from a traditional banking provider like Wells Fargo or Bank of America comes with virtually no risk. You might not get many perks, but at least it’s secure and convenient. 

When searching for checking accounts, the trick is to find one with low monthly fees and minimum balance requirements. The last thing you want to do is pay heavy maintenance fees or overdraft fees, which could cripple your balance. 

As you begin the process of finding the right partner, look for a financial services provider with an accessible mobile app for mobile banking and strong customer support.

Take your time, weigh your options, and you’ll make the right choice. Good luck!

Additional Disclosures: Millennial Money has partnered with CardRatings and for our coverage of credit card products. Millennial Money, CardRatings and may receive a commission from card issuers. This site does not include all financial companies or financial offers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.

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