12 Reasons To Open a Checking Account

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In today’s financial world, there’s a wealth of options available for managing your money. Among these, the humble checking account stands out as a cornerstone of everyday money management.

A checking account isn’t just a place to store money — it’s a powerful financial tool offering a range of benefits to enhance your money management. 

Here’s a closer look at why having a checking account is not just convenient but crucial in today’s digital age:

1. Streamlined Bill Payments

A checking account simplifies the process of paying bills. With automated payments or online banking features, you can ensure timely payments without the hassle of manual transactions or the risks associated with mailing checks.

2. Safe Money Storage

Storing large amounts of cash at home can be risky. A checking account offers a secure place to keep your money, protecting it from theft or loss while giving you peace of mind. Plus, many banks are insured. In the case the bank fails, your money will be safe up to $250,000.

3. Quick Access To Funds

Checking accounts provide immediate access to your money, whether it’s through ATMs, checks or electronic transfers. This ease of access ensures you can cover expenses or make purchases without delays.

4. Online Banking and Mobile Apps

Modern checking accounts usually come with robust online platforms and mobile apps. These tools allow you to manage your money, check balances and conduct transactions from anywhere, anytime.

5. Debit Card Privileges

With a checking account, you typically receive a debit card. This card can be used for everyday purchases or cash withdrawals and might even come with rewards or cash-back offers.

6. Automated Transactions

Checking accounts let you automate regular transactions, such as savings transfers or bill payments. This ensures on-time payments without the need to remember each one manually.

7. Easy Money Transfers

Transferring money is a breeze with checking accounts. Whether you’re sending money to a friend or transferring funds between accounts, the process is seamless.

8. Enhanced Financial Record-Keeping

With a checking account, you receive regular statements, either digitally or in print. These records are valuable for tracking spending, budgeting and tax purposes.

9. Potential Overdraft Protection

Some checking accounts offer overdraft protection, helping you avoid declined transactions or additional fees if you momentarily lack sufficient funds.

10. Direct Deposit Benefits

Say goodbye to waiting for physical paychecks. With direct deposit, your wages are instantly available in your checking account, speeding up access to your earned money.

11. Building Financial Discipline

Regularly monitoring a checking account can instill good financial habits. This can help you manage spending, saving and overall financial health.

12. Relationship Benefits With Banks

By maintaining a checking account, you can potentially qualify for better rates or terms for other bank products. Rates on loans or credit cards can be impacted, as many institutions value and reward customer loyalty.

What to Consider Before Opening a Checking Account

Every checking account comes with its own fees and features. Make sure you shop around to find the account that helps you reach your financial goals.

Things to consider when you’re looking for a checking account:

  • Are there monthly maintenance fees? Can they be easily waived?
  • Are there fees for using ATMs? This includes the bank’s ATMs and other banks’ ATMs.
  • Do they charge overdraft fees?
  • Do they have a mobile banking app that is easy to use?
  • Do they require you to have a minimum account balance?
  • What kind of customer service do they offer? For example, in-person or over the phone?
  • How many hours a day can you contact customer service?

Another thing to consider is the bank’s reputation. Google the name of the bank with phrases like “class action lawsuit” to see if there’s a history of the bank treating their customers poorly. 

You should also read the reviews of the banks’ app in the mobile store to see if any of the features or lack thereof are a deal breaker for you.

Alternatives to Traditional Checking Accounts

You may be familiar with the names of large “traditional” banks like Wells Fargo and Bank of America, but there are many ways to safely store your money outside of a traditional checking account. For example:

Online Banks

Online banks can sometimes offer lower fees and better benefits because they don’t have to pay for brick and mortar locations. They are still FDIC insured, which means your money is protected up to $250,000 in the event the bank fails. 

Check out our list of the best online banks.

Credit Unions

Credit unions are financial institutions that are different from banks in two key ways: they are not for profit and they often have stricter membership requirements.

Typical membership requirements are living and working in a certain area or being employed by a certain company. They usually offer the same services as a bank and your money is still insured up to $250,000. However, the insurance comes from the NCUA instead of the FDIC.

Credit unions can sometimes have higher interest rates and better financial products than traditional banks. 

Check out our list of the best credit unions. 

Money Market Accounts

A money market account usually has a higher interest rate, similar to a savings account. Most also come with checks or a debit card, similar to a checking account. They can be a great way to safely store your money and earn a little extra. One potential downside is that money market accounts are more likely to have a minimum balance requirement.

Check out our list of the best money market accounts.

Prepaid Debit Cards

If you’re still not sold on joining a financial institution, a prepaid debit card can help you store your cash. Instead of being connected to a bank account, you load a prepaid debit card and use it to make purchases.

However, make sure you’re away of the fees and limitations of the prepaid debit card you pick.

Check out our list of the best prepaid debit cards.

Things to Watch Out for When Opening a Checking Account

Understanding the fees, account requirements and interest rates of a checking account are really important before you open the account. Some things to consider:

Hidden Fees

Shop around for the lowest fees possible. Some banks charge monthly maintenance fees, but they’ll waive it if you meet requirements like a certain amount of transactions or bank account balance.

Some banks charge high overdraft fees. Other banks offer to waive overdraft fees if you meet certain requirements.

Account Minimums

If the checking account requires you to keep your balance at a certain amount, is that achievable for you? Not hitting your minimum account balance can cause you to pay a lot in fees.

Interest Rates

Some checking accounts pay you interest on the money in your checking account. Banks like Wells Fargo offers a interest rate. However, Lake Michigan Credit Union offers a APY on balances up to $15,000.

Is Opening a Checking Account Right for You?

A checking account is more than just a banking product, it’s a gateway to efficient financial management. 

With many advantages ranging from security to convenience, it’s a must-have tool in the modern financial toolkit. Whether you’re new to finances or just want to manage your money better, there are many beneficial reasons to open a checking account.

See our list of banks with free and no fee checking accounts.

Emily Gadd contributed to the reporting of this article.

Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.

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