A checking account is a bank account where you can store your money. With a checking account, you can write checks to pay your bills, transfer money to other people, and make withdrawals from ATMs. These days, most checking accounts offer online banking as well so you can view your account balance and pay your bills online.
A key feature of checking accounts is that they give you easy access to your money. You can take out money whenever you want and make a large number of withdrawals and deposits every month without any problems. In exchange for this access, these accounts pay very little to no interest on your money.
In This Checking Account Guide:
What Are The Advantages Of A Checking Account?
The main advantage a checking account offers compared to a savings account is that you can transfer money in and out of your account freely, while paying minimal fees. A checking account is the account of choice for receiving monthly payments (a salary, for example) and paying out monthly bills.
Because many checking accounts let you withdraw cash at in-network ATMs without paying a fee, this type of account works well for frequent cash withdrawals. If you run a home business, freelance, or if for any other reason you have a regular flow of money into and out of your account, a checking account can give you the flexibility that you need.
What Fees Will I Pay To Use A Checking Account?
Most banks don't charge a fee for you to have a checking account. However, they usually require that you keep a minimum amount of money in your account each month or you need to pay a fee. For example, if you don't keep at least $100 in your account, you'll owe the fee.
Banks will also charge fees if you overdraw your checking account, meaning you make a withdrawal or purchase for more money than you have in the account. If you want extra features like more checks or a safety deposit box linked to your account, you'll need to pay for these services as well.
You will usually also pay a wire transfer fee, though some accounts come with a set number of free wire transfers monthly.
Finally, if you use an ATM from another bank to take out money, you'll likely need to pay a fee to both your bank and to the bank that owns the ATM.
What Types Of Checking Accounts Are There?
While every bank has its own rules for checking accounts, they all have a few different categories. Basic checking accounts have the lowest fees and lowest requirements monthly balances. They also offer the fewest services. These accounts work best if you just need a place to deposit money, pay bills and use a debit card.
Premier checking accounts require that you keep more money in your account and in exchange they'll give some more free perks like free checks or a safety deposit box. To use a premier checking account, you'll need to keep a few thousand dollars in your bank account on average or pay a fee.
Student checking accounts are available for children and college students. These accounts typically don't have a minimum account balance requirement or if they do, it's lower than the limit of regular checking accounts. Banks realize students aren't working and would have less money to meet these requirements.
How Do I Pick The Right Account?
You're going to be using your checking account all the time, so it's important to pick the right bank for your needs. There are a few points to consider for this decision. First, you should pick a bank that has plenty of ATMs in your area. If a bank doesn't, there's a good chance you'll run into more fees by having to use out-of-network ATMs.
You also should consider how much you would likely keep in the bank each month. Make sure to pick an account that has a minimum balance requirement you can comfortably handle or you'll get hit with more fees. If you like to manage your bills online, check the company's website and see that they offer online banking. Finally, make sure there's a bank branch nearby in case you want to stop in with questions in-person.
By taking a little time to plan your checking account, you should be able to find the right bank for your needs. This will make every part of your financial plan a little bit easier.
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