A checking account is a type of bank account that allows you to easily deposit and withdraw money for daily transactions. This may include depositing a check you receive, taking out cash with your debit card or setting up direct deposit for your paychecks. Your checking account can act as a hub for all your financial transactions and help you stay on top of bills and in tune with your budget. It's also an account with a lot of flexibility, allowing you to easily manage everyday finances like receiving paychecks, making purchases, and paying bills.
You can put money into your checking account through these methods:
Writing checks for a deposit
Using ATMs
Electronic debit/credit cards connected to the account
Working with a bank teller
Direct deposits
Transfer from another account
Mobile deposits
Similarly, you can withdraw money through these methods:
Using an ATM
Writing a check for cash
Filling out a withdrawal slip
Linking your account to a peer-to-peer payment service
Transferring to another account
Setting up autopay
You will receive a Bank Statement (usually monthly) for your checking account that is a list of all transactions for a bank account. It includes deposits, charges, withdrawals, as well as the beginning and ending balance for the period. Checks or transfers that haven't been processed yet may not be included in the bank statement and will only be found on the next month’s statement. This is why it is important to reconcile your bank statement, which means look back and double-check all of your purchases and make sure they were ones you authorized and that the ending balance matches up with your transactions.
However, there are fees associated with a checking account. If you get Overdraft Protection for when you overspend, the transaction will not be denied. However, there will be a fee of around $2-$5 per transaction and it is auto-deducted as well as required to pay off later. Without Overdraft Protection, the purchasing store may send a check back to your bank and then charge you $25+ for the inconvenience. On top of that, the bank will charge you a different fee of $25+ as an administrative fee for not managing your account. Your debit card charges will be denied with the title NSF: non-sufficient funds appears.
To start a checking account, you need to pick a bank or a credit union to open it in. You need two forms of government-issued photo identification (ex: passport and driver’s license), your social security number or individual taxpayer identification number, and full contact information (ex: name, address, phone number, etc.) to open an account.
Banks are for-profit organizations that usually have more branches/ATMs, a larger variety of services, more global access, and a Federal Deposit Insurance Corporation (FDIC) $250,000 protected bank account. In contrast, Credit Unions are nonprofit and are member-owned (cooperative). The services offered here are usually more personalized but may need a special requirement to enroll. Additionally, the insurance provided by the National Credit Union Accounts (NCUA) may vary.
For example, here are a couple of popular options for checking accounts for you to compare and contrast:
Name of Bank or Credit Union | #1 BECU | #2 Chase | #3 Bank of America | #4 Axos Bank |
Is this a national bank, regional bank or credit union? | Credit Union | National Bank | National Bank | National Bank |
Is there a fee for a checking account? Other promotions? | $0 | $12 | $4.95 | $0 |
Is there a minimum balance? (How much) | $500.01 is the minimum to get interest | $12 monthly fee if you are below $1500 | $12 monthly fee if you are below $1500 Minimum opening deposit is $100 | No minimum |
What are the overdraft fees? (How much do they charge for the convenience | $0 | $34 | $0 | $0 |
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