GOBankingRates

What Is a Checking Account?

RyanJLane / istockphoto.com

If you want to make managing your day-to-day finances easy, you should open a checking account. With one, you can pay your bills, withdraw cash from an ATM and get your paycheck automatically deposited.

If you’ve never had a checking account, you likely have questions, such as “What is the difference between a checking account and a bank account?” and “What is a checking account vs. savings account?”

Keep reading to find out everything you need to know about checking accounts.

What Is a Checking Account?

Simply put, a checking account is one type of transactional deposit account. You can open one at a credit union, a brick-and-mortar bank or an online bank. When you have a checking account, you can use it to make purchases via checks or debit card, pay bills and deposit money. Checking accounts differ from savings accounts in that you typically use a checking account for everyday purchases and bill paying, whereas you typically keep money in a savings account for the long haul.

What Does a Checking Account Do?

A checking account enables you to spend and deposit money, and you can usually use this type of account for a number of different types of deposits, such as:

Earn Perks With A New Checking Account

Direct deposits enable you to have your paychecks or government benefits go directly into your account — all you need to do is give your employer your bank account number and routing number.

You can also make convenient mobile deposits by taking a photo of a check and depositing it in your account. Note that cash deposits still require a trip to the ATM.

When you write a check to someone, they deposit that check and the money is taken out of your account and put into theirs. But writing a check isn’t the only way you can pay for things from a checking account. You can move money to or from your checking account in the following ways:

Earn Perks With A New Checking Account

What Are the Different Kinds of Checking Accounts?

Depending on where you bank, you’ll likely have a choice regarding what type of checking account you want to open. These choices might include the following:

Earn Perks With A New Checking Account

Is a Debit Card a Checking Account?

Although a debit card is typically issued when you open a checking account it’s not a checking account itself. A prepaid debit card is independent of a bank account, and you can add money to it and use it to pay for things, just like a checking account debit card.

It’s important to keep in mind that if your debit card is attached to your checking account, every purchase you make with it will come out of that account. So, say you buy $50 worth of groceries with your checking account-linked debit card. Your account balance will be reduced by that amount as well.  

How Do I Choose a Checking Account?

The first thing you need to do when you’re looking to open a checking account is decide where you want to do it. Do you want a brick-and-mortar account, an online account or a credit union account? If you like to visit a branch occasionally, obviously the brick-and-mortar would be a good choice. But if you like the convenience of banking online or want to pay less in fees, you’ll want to consider an online bank or credit union, respectively. Here are some factors to consider when making your decision:

Earn Perks With A New Checking Account

In addition, take into consideration the features you want most out of a checking account. For example, you might want to earn rewards on the things you buy, or you may insist on online banking capabilities or a large ATM network. Try to find the best combination of features and costs to fit your own financial needs.

What Do I Need To Open a Checking Account?

Online checking accounts are easy to open — you just need to supply your personal and financial information and arrange your opening deposit.

If you’ve chosen to open a brick-and-mortar account you’ll usually have to provide the following information to the bank: name, address, birthdate, phone number, email address and Social Security number. You will also need a government-issued ID.

Bottom Line

There are plenty of reasons to open a checking account, including providing safety for your financial transactions with an FDIC-insured account and having easy access to your funds. If you decide to open a checking account it’s esssential that you first decide which type you want, then research your options so you find the best mix of features and fees that fit your individual needs.

Earn Perks With A New Checking Account

Ashley Eneriz contributed to the reporting for this article.

Information is accurate as of Nov. 14, 2022.