Lost your free checking?

The number of financial institutions offering free checking accounts is 11% lower than a year ago, according to a survey released in August by Moebs $ervices, the economic research firm in Lake Bluff, Ill. While consumers have come to expect free checking, the continued economic downturn and new federal regulations governing banks have caused many banks to pull the plug on free checking to boost revenue.

"Some depositories have stopped offering free checking as a way to reduce costs in light of overdraft and financial regulatory reforms," Moebs CEO Mike Moebs said in a news release. "Others face low earnings and a shortage of capital, so lower expense and higher revenue are needed to rebuild their capital position."

If your bank has started adding monthly fees to maintain your checking account, you have other options. Here are five ways to obtain free checking.

Rethink online banking

Many online banks offer free checking or low-fee services because they don't have the overhead costs of maintaining branch locations. But, many consumers shy away from these institutions because "the Internet doesn't evoke that tangible, brick-and-mortar feeling you want to have, considering that's where your money is held," says Robert Schmansky, a CFP with Northern Financial Advisors in Franklin, Mich.

"In reality, all banks are online and processing transactions electronically," Schmansky says. "The only real difference is most online banks do not have the retail distribution outlets. Brick-and-mortar banks are as much online as any online bank."

Schmansky often refers his clients to the online banks ING Direct, Charles Schwab Bank and EverBank, which "offer banking services without the high fees," he says. He recommends that customers "test-drive" a few banks to get a rundown of their services before settling on one, to make sure it's a good fit.

Finally, "when your method of doing your banking is entirely on the Web or over the phone, customer service is crucial," Schmansky says. "Call customer service a few times to judge its responsiveness."

Consider credit unions

Credit unions are "fundamentally different from banks because they are not-for-profit and member-owned," says Mike Schenk, vice president of economics and statistics for the Credit Union National Association, or CUNA.

Because credit unions are generally "in the business of maximizing returns to members rather than shareholders," they can often take operational discounts and offer services at a lower cost than many banks can, Schenk says. These days, those services include free checking.

According to CUNA's 2011-2012 Credit Union Fees Survey Report, 79% of the group's members that offer checking accounts offer them for free. To find a credit union that offers free checking in your area, check the local phone book, contact your state's credit union association or use the credit union finder on the CUNA website. While credit unions traditionally have served only those in a limited group, such as employees of a certain company, standards have changed and many credit unions are open to other residents of their local communities.

Move to a specialty bank

In many cases, checking accounts with high balances are still free. But banks are giving up free checking for low-balance accounts because they have little chance of making money off these customers with high-revenue loans, says Reid Mack, managing director of Jackson Witter & Associates, a banking analysis and consulting firm in Miami.

"The answer for customers in need of low-balance, free-checking accounts is to move to a specialty bank that is willing to take on higher-risk lending by offering very high rates to offset the risk," Mack says. "(These banks) offer credit card and car loan rates in the 12% to 30% range."

At a specialty bank, the primary goal of the bank's charter is narrowly focused. For example, Ally Financial, formerly GMAC, has a goal of supporting the auto industry, so much of the profits from Ally Bank come from car-loan financing.

CapitalOne, one of the largest issuers of credit cards, makes up for lost fees in free checking accounts with the high return rates from its credit card operation, Mack says. And insurance companies like Allstate, State Farm and Nationwide, which primarily exist to sell insurance, attract customers to their specialty banks with free checking.

Check with your employer

If fees have been added to your personal checking account, find out if the company where you work has agreements with banks to offer discounted services to employees.

"Often companies have a plan with a major area bank that offers free checking," says Robert J. Fuest, chief operating officer and head of investment research at Fuest Capital Managers LLC based in New York.

"(People) who work for larger companies are often unaware of this, (especially) if they have been with the company for some time. This is a very common practice for larger companies to offer this option as part of their benefits package, but it is often less publicized unless the employee searches the internal benefits website," Fuest says.

In addition to free checking, some banks offer employees of public companies additional corporate services like higher rates on savings accounts, Fuest says. Many employees with smaller balances can take advantage of higher interest rates that would typically only be available to very high-balance saving accounts.

Opt for prepaid debit cards

If you can't get free checking, consider simply nixing your checking account and using a reloadable debit card, a "checkless, electronic bank account that follows the cardholder wherever he or she goes," says Crystal Wright, spokeswoman for the Network Branded Prepaid Card Association in Montvale, N.J.

"Branded with the Discover, MasterCard, Visa or American Express logo, (the cards) are accepted anywhere the brands are accepted," Wright says. "They are used by cardholders to pay bills, make purchases and get ATM access. Cardholders can only spend what they load onto the cards, making them great budgeting tools."

In addition, prepaid debit cards are cheaper to use than checking accounts, according to a study of comparative fees conducted by Bretton Woods Inc., a banking consulting firm in St. Simons Island, Ga., in October 2009.

If you're worried about security, most network-branded prepaid cards come with protective agreements that do not hold the cardholder liable for lost or stolen cards, Wright says. They're also easy to get. Most can be purchased and reloaded with funds online or at more than 200,000 retail stores nationwide.