There are many different types of bank accounts and one of them is a checking account. A checking account is for professional purposes. No matter what kind of business you own, a fast food joint, a big manufacturing company, or if you are only a real estate agent, you surely need an account in order to put your income. This is where checking accounts come into play.
Many people want to know what is a checking account and what all does it includes. They want to know everything about checking accounts, how they can register for one as well as how they can benefit from it. Now, you can get to know everything about checking accounts from this article.
What is a checking account?
A checking account is like any other bank account. You can use it for buying groceries, depositing a paycheck, or just for withdrawing cash from an ATM. In addition to this, checking accounts offer a range of services to its customers. Let us look at what all checking accounts have to offer and how you can pick up the best checking account for yourself.
Fundamentals of checking accounts
As the name suggests, checking accounts are associated with checks through which you can make your payments. However, you can argue that in the modern world ATMs or debit cards are used more often than checks in order to get access to cash.
On the contrary, checking accounts are preferred because they do not put many restrictions on customers as to how frequently consumers can access their money, unlike certificates of deposit (CDs) and savings accounts. This makes checking accounts perfect for daily spending. However, your bank can place monthly or daily limits on ATM withdrawals through your checking account. Therefore, when you are planning to go for a new checking account, ensure that its restrictions match your spending practices.
Although, checking accounts are not famous for their interest rate, which is the percentage of the payment that you will get for keeping your cash, there are some online-only credit unions and banks, in addition to certain brick and mortar banks that offer interest rates on checking accounts that are as high as one per cent.
Besides knowing what is a checking account, you must also know that some checking accounts offer amazing sign-up bonuses in order to lure customers to get a checking account from them. However, you must not opt for a checking account only due to its great promotion. You should see other things as well. But, certainly the sign-up promotion can help you in choosing the right checking account between two otherwise similar options.
Fees of checking accounts
Although you should look for the above mentioned things while going for a checking account, it is imperative that you must also know the things that you must avoid while signing up for a checking account. This refers to the fees charged on various checking accounts. Fees are quite a common thing and can get quite frustrating for owners of checking accounts.
A few checking accounts, particularly the ones offered by big national banks, charge a maintenance fee, which can be up to $15 per month. These fees are beneficial for banks as they compensate for the high costs of banks that is required to maintain thousands of its branch offices. However, fees on checking accounts also put a considerable dent on customers’ wallets, especially those people who are not able to fulfill the fee waiver requirements of these banks.
This is why many people opt for checking accounts that are offered by digital banks. Some credit unions, regional banks, as well as many online-only banks provide checking accounts to customers that are free of cost and come with economical overdraft fees.
Types of checking accounts
After knowing what is a checking account, when you are looking for the right checking account for yourself, you need to pay attention to some of the things, including a wide ATM network, low fees, and other such services that suit your personal spending habits. There are a lot of different types of checking accounts that you can opt for. Some of the common ones are:
- Free checking accounts
There are many online-only banks as well as credit unions that offer customers checking accounts, without any minimum balance or m
onthly fees requirements. However, if you choose such a checking account, you will not be able to access a lot of branch locations of the bank or credit union.
- Rewards checking accounts
People who want to use their checking account quiet frequently and want some extra benefits too, then they can opt for rewards checking accounts. These types of checking accounts offer benefits, such as reward points, ATM fee refunds, and above-market rates of interest. In addition to this, there are some rewards checking accounts that are offered free of cost, even though you do not match its monthly reward earning requirements.
- Online checking accounts
Most of the credit unions and banks offer checking accounts, which let you execute all your account transactions as well as details from the internet. They come with some extra perks too, like mobile check deposit, ATM fee refunds, and competitive interest rates.
- Teen checking accounts
Youth or teen checking accounts are great for budding customers, who want to examine their personal finance before taking any huge step. These types of checking accounts require a guardian or parent who can co-sign. Also, teen checking accounts offer financial education, besides other useful perks.
Now that you know what is a checking account and what are the different types of checking accounts, you can open one for yourself by selecting one of the above mentioned checking accounts that suits you the best. You just need some important documents and your new checking account will be opened. After opening your checking account, you can boost your savings by setting up automatic transfers to your saving account and signing for direct deposits.