A checking account is a versatile bank account that provides easy access to your deposited funds. Unlike savings accounts, checking accounts allow unlimited withdrawals and deposits, making them ideal for day-to-day transactions and payments.
However, checking accounts typically offer lower interest rates compared to other accounts like savings accounts and CDs. It’s advisable to use your checking account for daily expenses and bills, while considering higher-earning assets for your savings.
How to Use Checking Accounts
Accessing funds from a checking account is convenient with multiple options available:
- Writing checks
- Depositing paper checks via a mobile app
- Making purchases with a debit card
- Withdrawing and depositing through ATMs
- Visiting a local branch for transactions
- Using online bill pay services
- Setting up automatic payments
- Transferring funds between accounts
Before opening a checking account, it’s essential to understand the various account types available and the basics of managing a checking account, such as check writing and account balancing. Below is a guide to assist you in selecting and handling a checking account.
Free Checking Accounts (and How to Qualify for One)
Accounts labeled as “free” must not have certain fees:
- No minimum balance requirements
- No monthly maintenance or service fees
- No excess-transaction fees
- No fees for deposits, withdrawals, or transfers
While free accounts waive some fees, charges like overdraft fees and others may still apply.
- Dormant account fees
- ATM fees
- Bounced check fees
- Balance inquiry fees
- Check-printing fees
- Stop payment fees
Banks can change account types and fees with a 30-day notice to customers.
Some banks offer free checking if certain conditions are met, such as maintaining a minimum deposit or signing up for electronic statements. Failure to meet these conditions may result in the loss of free checking privileges.
Interest-Bearing Checking Accounts
Interest-bearing checking accounts allow you to earn interest on your account balance while providing the flexibility of a checking account.
Banks offering interest-bearing checking accounts may have minimum balance requirements and monthly maintenance fees. Interest rates vary, so it’s wise to compare rates among different banks to find the best option for you.
Credit unions typically offer better interest rates on checking accounts. Shop around to find the most competitive rates and terms that suit your financial goals.