Checking account definition
/What is a Checking Account?
A checking account is a bank account from which funds can be withdrawn by writing a check. Funds can also be withdrawn from this account with an automated teller machine or via an electronic debit. This type of account pays little or no interest. However, depending on the institution at which a checking account is located, the federal government guarantees the deposited funds, up to a preset maximum level.
What to Consider When Choosing a Checking Account
There are a number of factors that can influence your decision regarding which checking account product to select from a bank. You may give differing weights to these factors, depending on your unique circumstances. The key decision factors are as follows:
Fees. Always review the types of fees associated with the checking account, such as monthly maintenance fees, overdraft charges, and ATM fees. Some banks waive these fees if you meet minimum balance or direct deposit requirements. Understanding the fee structure helps you avoid unexpected costs and select an account that fits your usage patterns.
Accessibility. Consider how easily you can access your money, whether through physical branches, ATMs, online banking, or mobile apps. A wide ATM network and strong digital tools make it more convenient to manage your finances anywhere. If you travel often or prefer mobile banking, accessibility becomes even more critical.
Interest rates. Some checking accounts offer interest on your balance, although typically at lower rates than savings accounts. Compare rates if you intend to keep a significant balance in your checking account. Even a small amount of earned interest can add up over time and improve your overall return.
Minimum balance requirement. Many checking accounts require you to maintain a certain minimum balance to avoid monthly fees. Falling below this threshold can trigger extra charges that erode your account balance. Choose an account where you can comfortably meet the balance requirement based on your typical cash flow.
Overdraft protection. Overdraft protection options can prevent declined transactions, but they may involve transfer fees or interest charges. Some banks link your checking account to savings or credit accounts to automatically cover shortfalls. Understanding these terms helps you avoid costly overdraft penalties while maintaining uninterrupted access to funds.
Customer service. Good customer service is vital if you encounter issues with your account or need assistance with transactions. Look for banks with strong reputations for responsive service, helpful representatives, and easy-to-use support channels. Quality service can make a big difference when resolving disputes or managing unexpected banking needs.
Additional features. Some accounts come with perks like cashback on debit purchases, identity theft protection, or budgeting tools. Evaluating these extra features helps you select an account that provides more value beyond basic banking services. Sometimes a seemingly small feature can lead to significant long-term benefits.
Checking Account Fees
The bank at which a checking account resides can impose a number of fees on the account holder. This can include a charge for each check cashed, an overdraft fee, and a charge to print additional checks. Banks tend to overcharge for the cost of printing additional checks, so a good cost-saving measure is to order them from an independent printing company, usually at a fraction of the cost.