It’s important to have a place to keep your money; ideally, that place won’t be under your mattress. A bank account allows anyone a place to manage his money and keep it safe. A checking account is a particularly useful account for keeping your paycheck and managing your daily financial transactions.
What Is a Checking Account?
You can have any of several different types of bank accounts; among the most basic is a checking account. A checking account is an account that gives you the most access to your funds. It’s the account you will use frequently for paying bills and funding purchases.
The main difference between a checking account and savings account is that a checking account is meant to assist you with your daily transactions and paying bills, whereas a savings account is meant to accumulate interest and its funds to be saved for future needs.
However, you don’t have to pick a checking versus savings account. In fact, it’s a good idea to have and use both.
Checking Account Features and Fees
When you open a checking account, you have access to several account features. For example, you’ll be able to pay for transactions with your debit card or by writing a check. Some checking accounts earn interest, whereas, others come with free online bill pay.
Fees for checking accounts differ based on the financial institution. Some banks and credit unions offer no-fee checking accounts, whereas, others offer free checking accounts for which the usual fees are waived after you meet the necessary requirements, such as setting up direct deposit.
Here are some common fees associated with checking accounts:
- ATM fee: If you withdraw money from an ATM not associated with your bank, you might be charged a small fee.
- Overdraft charge: Withdrawing more money than you have in your account can lead to overdraft charges.
- Foreign transaction charge: Using your debit card or using an ATM overseas might cost you a fee.
- Minimum balance fee: Some banks require accounts to keep a minimum daily balance. If you fall below that balance, your account can be subject to a fee.
- Check or debit card fee: If you lose your debit card, you might be charged to replace it. Furthermore, some financial institutions charge for checks.
Types of Checking Accounts
You can choose from several types of checking accounts, each of which comes with its own advantages and disadvantages. Here are few common types of checking account:
- Online-only checking account: When you open a checking account that’s online-only, you are forgoing the typical brick-and-mortar financial institution for an account that conducts all transactions via the internet. It’s best to know about the bank’s security and customer service before signing up.
- Interest-bearing checking: An interest-bearing checking account allows you to earn interest on your money. This type of checking account is usually reserved for higher balances.
- Business checking account: This type of checking account comes with features to track business spending and expenses.
- Student checking account: Available for students, this type of account typically comes with a lower balance requirement and fewer fees.
- Senior checking account: Some banks offer accounts designed with features fit for older adults, such as free traveler’s checks.
How to Open a Checking Account
Opening a checking account is easy; you just need to decide first which financial institution you want to bank with. Once you know where you want to open your checking account, find out the requirements of the account so that you don’t have to pay any fees. Some financial institutions require that you have a monthly direct deposit, a minimum balance or opening deposit. You can open your checking account at a local bank or credit union location, or you can apply for an account online if the financial institution offers that option.