Katie Stiner

There are several types of checking accounts to choose from, a better understanding of these accounts helps you know the right option for you.

Checking accounts are the most common and the most convenient accounts for both banking institutions and consumers. For example, users can make regular deposits, transfers, pay bills, withdraw, and write checks. It is also quicker and easier to access as compared to a savings account.

Now that you understand how a checking account operates, the following are the different types of checking accounts offered by banks and credit unions.

1. Traditional checking account

Traditional checking accounts can be accessed through checks, debit cards, ATM cards, or online bill payments. Some of these accounts do not have maintenance fees or allows holders to request a waiver.

You will be charged a fee if your account balance falls below the minimum balance. Traditional checking accounts also have overdraft facilities to help with purchases or transactions in case of a low account balance.

2. Premium checking account

A premium checking account is convenient for individuals with a huge account balance.

Holders of this type of checking accounts do not pay monthly fees and enjoy several perks. These perks may include free checks, free safe deposit box, free money orders, ATM fee reimbursement as well as a waiver on out-of-network ATM fees.

Users also enjoy interest benefits like earning interest on their deposit and potentially a lower mortgage interest rate.

3. Interest-bearing checking account

Holders of interest-bearing checking accounts earn higher interest on their deposits. There are specific requirements that need to be met to earn interest, such as minimum direct deposit or a minimum number of debit card transactions.

The interest rate will either be a flat rate (regardless of account balance) or a tiered system (based on balance).

For example, up to a $10,000 balance can earn 0.4% APY but if you have $10,001 you go up a level and get 0.5% APY.

4. Free-checking account

The free checking account does not charge recurring fees, such as monthly maintenance fees, it also has no minimum balance requirement and no fees if the minimum balance is not met.

Fees incurred by this account may include check fees, out-of-network ATM fees, overdraft fees, stop payment fees, and foreign transaction fees.

The free checking account has no interest in deposits because holders already do not pay monthly fees.

5. Low-balance checking account

Customers with low income that can only maintain small balances in their accounts are offered low-balance checking accounts, also known as lifeline accounts.

Banks do not gain much from low-balance accounts because they have very low or no minimum balance requirements.

Most banks limit the transactions these accounts can perform. Such limits can be limited to no check-writing, no overdraft protection, and electronic monthly statements instead of paper statements.

6. Second-chance checking account

A second-chance checking account is opened to a person who previously had a checking account but was closed because of bad banking history, reported by ChexSystems or the bank determined the client unfit for their services.

These account holders usually pay a monthly fee of up to $20 and have more restrictions than other checking accounts, such as no overdraft protection.

Banks periodically review how a second-chance account is maintained. After a period of time, the second chance checking account can be converted to a normal account if the account is in good standing and has a good enough history when under review.

7. Student checking account

A student checking account is opened for minors or students and has no cost or low cost. No credit or bank history is conducted for holders when opening this account.

Account-holders can have check-writing privileges and a debit card. Most student checking account holders range between 13-23 years of age, and some banks convert the accounts to a standard checking account when the student is 23+ years old.

8. Senior checking account

A senior account is meant for people that are 55+ years or older and comes with multiple perks, such as free check orders.

Perks vary by the bank but costs are usually significantly less with these types of accounts.

Although these accounts are supposed to be cheaper, still look around to see if a traditional or another account would be the better alternative.

9. Rewards checking account

These accounts come with either a cashback or points incentive when using your debit card.

If you don’t like paying the annual fee on credit cards, this could be a great alternative. Just be aware of the fine print to see if there are any requirements that need to be met to earn cashback or points.

How to choose a checking account

To choose the right checking account, here are several factors to consider when deciding on an account:

Account fees

Banks charge different fees on checking accounts. It is necessary to compare all the fees associated with each checking account before opening one.

The best way to choose a checking account is to base it on account fees and your spending habits.

The most common checking account fees are:

Maintenance fees

Some checking accounts have monthly maintenance fees, especially if account balances do not meet the minimum balance required.

If you spend more often and the account balance won’t be around the bank’s minimum balance requirement, then go for a checking account with a low or no minimum balance.

Some banks waive maintenance fees on checking accounts.

Thoroughly read the fine print specifying maintenance fees before deciding on the best checking account to open and with which bank.

Overdraft fees

Overdraft fees are charged when you write a check or make a purchase with insufficient funds in your checking account. These fees are usually expensive and still occur with overdraft protection, but the payment will go through.

The overdrawn amount should be taken care of as soon as possible to avoid penalties even when under overdraft protection.

ATM fees

You will be charged ATM fees ranging from $2.50 to $5 when using an ATM to make a withdrawal, deposit, or just a simple balance inquiry.

ATM fees will depend on whether you are using your bank’s ATM, out-of-network ATM, or an international ATM.

Some checking accounts offer reimbursements on ATM fees as well as a waiver on out-of-network ATM fees.

Interest and rewards

Checking accounts also come with interest incentives that can match that offered by savings accounts.

The interest rate varies depending on each type of checking account; some offer a flat rate on deposit, while others offer higher interest with a higher account balance.

Also consider if you will be doing a lot of debit transactions, so it’ll even be worth getting a rewards checking account to benefit from points or cashback.


If you don’t like waiting at the bank or don’t have the time, consider looking at online banks.

This will enable you to check your account balance, pay bills, transfer money, or make deposits without visiting branches.

Customer service

Convenience goes hand in hand with customer service. Sometimes challenges can occur when making transactions online.

When choosing to open a checking account, read through each bank’s online customer reviews to get a clue on a bank’s level of customer support.

Final thoughts

All types of checking accounts are meant to serve a specific financial situation and each has there maximum advantages.

If it’s challenging to maintain the minimum balance, look for a checking account that has a low or no minimum deposit requirement.

Some types of checking accounts offer the same or better services than other accounts. A free checking account, for example, can serve you the same way as a low-balance checking account.

Carefully compare each checking account and choose the one that will help you meet your goals.

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