What is a Checking Account?

Feb 24, 2024

These accounts act as liquid bank accounts and allow easy access to your money. In addition, you can get unlimited deposits and withdrawals, but each bank has different regulations in this regard.

What is a Checking Account Used for?

However, its purpose is to keep your money insecure for a specified time. It is also prest at the time of paying bills and other expenses. You can send your paycheck to your checking account and transfer some amount to your investment or earning account.

Keep in mind not to use checking accounts for long-term goals like saving for a house because it has a low-interest rate. In addition, many banks offer different levels for their checking performance. So, there may be a chance to earn more interest.

Types of Checking Accounts

All checking accounts are not the same, but there are different types of accounts you can opt for as per your requirements. Here is the list of common types of checking accounts and how they work.

1. Standard or Traditional Checking Account

It is s basic checking account that is useful when paying bills, writing checks, and purchasing through a debit card. It has a minimum balance requirement and requires you to pay a specific amount to pay the maintenance fee. It also needs a minimum deposit to open a standard checking account. Plus, it offers unlimited check writing abilities. It gets access to mobile banking so that you can manage your money effectively.

2. Interest Checking

Interest checking accounts have some similarities to checking accounts. However, there is one significant difference: it allows you to earn interest in your balance. In addition, you do not need to have an amount to open this amount. You can enjoy competitive interest rates.

Nevertheless, the amount you earn is less than a high-profit saving account. But this account can help you to grow some money. Plus, you will remain able to write checks and pay bills.

3. Rewards Checking Accounts

These checking accounts pay interest sometimes, but they allow you to earn rewards when you spend. It works in the way you earn points and a percentage of cash back whenever you make a purchase, make a direct deposit or pay bills monthly.

However, these accounts are less popular and interest-bearing checking accounts. Every back follows a different procedure to cash your rewards. For instance, if you earn a cashback on a debit card purchase, you may get this cash deposited into your bank account directly. In addition, banks may offer you to transfer this reward into a gift card or in travel form.

4. Senior Checking Account Banking

These accounts are specified for older clients as per age requirements. Many banks require you to be 55 years or older to qualify for this account. Senior checking accounts offer certain benefits, including personalized debit cards, free premium checks, fee waivers, and higher interest rates.

How to select a checking account?

Are you going to open your first checking account, or have you previously opened it? In both cases, here are some essential things to keep in mind.

The major thing you need to take into account is to open a checking account at a bank, brick-and-motor, or credit union. Each of them varies in terms of charges, and you can select the one at your convenience.

Secondly, makes sure to look at all things in detail before paying for a checking account. Some common fee types include:

  • Minimum balance fees
  • Wire transfer fees
  • Monthly maintenance fees
  • Non-sufficient funds fees
  • ATM fees and surcharges
  • Overdraft protection fees
  • Overdraft fees
  • Account inactivity fees

Bottom Line

Finally, while getting a checking account opened, you can focus on the benefits and features you will receive and if they are essential to you. Most common benefits may include mobile and online banking access, earning purchases, or rewards.

If you select the correct checking account, you will ultimately enjoy plenty of features and benefits that will fit your banking needs.

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