Checking accounts play a vital role in our lives – whether through transferring money to another person or getting your paycheck. According to the 2020 report on households’ economic well-being, 79 percent of adults in the U.S. have a bank account.
Out of all the types of bank accounts, checking accounts provide the fastest and most efficient access to your finances – whether through a bank or credit union.
It is a bank account you can use to save or withdraw money, and this account makes it possible for people to easily access their funds in different ways. The account is also called a demand deposit account, making it very liquid, so it gives users a fast method of accessing their funds.
The main aim of opening a checking account is to securely keep your money, so you can access it when you need it to pay for something. It is not advisable to use these accounts for long-term goals, such as saving to purchase a property, because they give a low-interest rate. But some banks may provide a higher rate, so you always have the opportunity to earn more interest.
» Looking for a high-interest bank account? See WalletBrain’s favorite checking accounts.
They’re called checking accounts because you could write paper checks, which allowed users to send funds from one account to another.
Typically, a checking account has these features:
Your money will go in and out of a checking account regularly, and these accounts make it easier for people to receive and spend money. The account can automate money deposits and withdrawals, thereby making your daily finances easier to handle. Your employer can arrange a direct deposit of your paycheck into your account, enabling you to get your money quicker.
There are several ways you can use and access money in a checking account, they include:
There are also additional features to a checking account, such as a mobile deposit. With a mobile deposit, you can take a picture of a check and deposit it into your account. This makes it convenient because you don’t have to physically go to a bank branch or an ATM to make deposits. However, to deposit cash into that account, you must go to a bank branch or ATM.
When it comes to accessing your money, there are few limitations. Some banks might have a daily withdrawal limit or a limit on the amount you can transfer from your account per day. When your purchasing goods or services, be aware of the daily limits.
Also, checking accounts are now more convenient to use due to advances in digital banking. It is possible to pay bills through electronic transfers, thereby eliminating the need to write and send paper checks.
There are few ways to open a checking account. You can go to the bank branch, or sign up online.
To complete the process, you’re required to provide some personal information such as your address, date of birth, a valid means of identification, and your Social Security number. Some banks also require you to deposit some money to complete the process.
Once the account is open, your bank will quickly carry out a background check on you using a system that maintains information about bank accounts. If the system shows that you have a negative banking history, the bank can suspend the account opening process until you’ve cleared your negative status.
» For additional information, check out how to open a checking account.
If you get denied opening an account, plead with the credit union or bank to reconsider. Sometimes, all you need to get the bank to change its mind is to talk to a bank officer. To prevent any issues with your bank account, monitor your checking account to view anything that would cause a negative banking status.
Here are a few reasons for being denied an account and what to do.
Although you don’t get charged for the funds in your account, some banks require you to pay monthly fees. Depending on the bank, you don’t have to pay certain fees if you meet specific requirements, such as a minimum balance in the account.
You can also get charged for an overdraft fee when you spend more money than you have in the account. To avoid paying overdraft fees, pay attention to the funds you have available and abide by your monthly target. Some banks allow users to set up overdraft protection that automatically pulls money from a linked account to cover any extra charge.
Not all checking accounts are the same. Some provide higher rewards and interests, and others have features specific to the needs of some individuals. There are different options to choose from, so you need to understand what they are and their benefits before you make your choice. Here are the different types of checking accounts offered by banks and credit unions.
A checking account is an account used for transactions, such as purchasing groceries. There are various types of checking accounts, so before you open an account, consider the features the bank account has to offer, such as access to online or mobile banking, gaining rewards after paying for items, a network of ATMs, or higher interest on the account.