What is a Checking Account?
A checking account is an account held by a bank or credit union that allows easy access to funds. Once an account is opened, funds can be deposited at any time. Funds can also be withdrawn through several methods. The amount of withdrawals allowed within a certain period of time depends on the checking account.
Opening a Checking Account
You can open a checking account in less than an hour at most banks or credit unions. Different types of checking accounts may require minimum initial deposits. Free and basic checking accounts usually require an initial deposit of $50 or $100.
To open a checking account, simply visit the financial institution where you want to hold an account and approach the teller station. Let the teller know you want to open an account. You will be directed to an employee who can assist you. That employee will enter your information into the computer, set up your account, assist with your first deposit, and provide you with temporary counter checks. To complete this process, you will need to provide your driver’s license.
Types of Checking Accounts
One of the most common account types is the basic account. This is an account without bells or whistles that allows you to write a few checks and use your debit card occasionally. Often, these accounts have monthly fees or charges for writing over a certain number of checks per month. Sometimes those fees can be waived by keeping a minimum amount in the account at all times or enrolling in a direct deposit program.
A better version of the basic checking account is the free checking account. This usually comes with the ability to write unlimited checks as long as funds are available. Most free checking accounts come with a debit card. Both basic and free checking accounts often allow online access to view account status and transfer funds.
An interest bearing account allows you to earn interest on the funds held in your account. This combines some of the benefits of a savings account with your checking account. However, most banks require a minimum balance for such an account or they charge monthly fees that cancel out any interest earned.
For the technically savvy, an express account may offer great benefits. However, you should be wary of setting up such an account if you plan on using the physical bank location to make deposits, withdrawals or transaction queries. You may be charged for each visit to the teller.
You can also choose to set up a joint or student account. Available as an option on almost all account types, joint checking allows multiple people equal access to funds. This is the type of account most married couples have. It is also helpful when a family member is taking care of finances for another. Student and child accounts often come with some restrictions but have no minimum deposit or balance requirements.
You can withdraw funds from a checking account by:
- Writing a check
- Using a debit card
- Visiting a teller
- Transferring funds online.
Balancing a Checking Account
It is important that you record all withdrawals and deposits accurately in your check register. When your bank statement comes each month, you should compare your register to the statement. Check off items that have processed. Keep an eye on items that do not process, and write in any items on your statement you neglected to record in the register. Overdrawing an account can cost hundreds of dollars in fees, so you should always know how much money is on deposit.