A checking account is a bank account for everyday expenses. It is also known as a transactional account or current account. In addition, there is no limit to how often you can get access to your money. Because it is the account you use to pay your bills and most of your financial transactions.
Different between checking account and savings account
While a savings account might limit the number of withdrawals or the number of transfer to a checking account within a monthly cycle, a transactional account normally does not have any limits. Also, a checking account is an account for spending. However, a savings account has as main purpose is for storing money for future utilizations.
Opening a checking account
To open an account, you first need to shop around. Visit the financial institution website. Check out for information such as bank fees, any interest-bearing. Further, ask information regarding daily limit withdrawal, overdraft limit. More, evaluate the ATMs network, easy to do transaction out state and limitation that comes with the checking account.
Once you are at the bank office, you will need to provide your social security and a valid form of identification. If you are a minor you will need a co-signer. After a quick background check is run on you especially to check of you have been reported to ChexSystems or a similar company.
Then you will deposit the minimum amount required. Then you will receive a debit card and checking. Moreover, the bank or the microfinance will help you download the app if they have one. additionally, the bank representative will provide information about online banking options. Finally, the bank will make sure you understand the bank policies, rules, and regulations regarding your checking account.
How to get access to the money in your checking account?
You can do this by either using your debit card to make payments, online, withdraw cash or by writing a check.
Protection
Generally, a checking account is insured up to $250,000 by the FDIC (The Federal Deposit Insurance Corporation). Nevertheless, your current account should only be reserved for funds you need for your daily transactions during the month. Ultimately, always monitor your checking account to report any unauthorized transaction. Lastly, if any of your checkbook or debit card is stolen is important to report immediately.
Fees associated with your checking account
- Maintenance fees
- Overdraft fees
Overdraft options
Definitely find out about your overdraft protection. Some banks or credit unions will allow you to link your current account to another account to cover your account when it is negative by automatically transferring the missing amount. Other banks will give you a line of credit or will allow you to overdraw up to a certain limit. You should educate yourself on the best over drafting protection.
Takeaways
- Checking account is great for everyday expenses
- They come with a debit card, checkbook or ATM card.
- Checking account has a lower interest rate than a savings account
- Limit your overdraft to avoid paying for overdraft fees.
Q&A
- Overdrafts: A deficit in a bank account caused by drawing more money than the account holds.
- ATMs: Automatic Teller Machines
- FDIC: Federal Deposit Insurance Corporation
- ChexSystems: check verification service and consumer credit reporting agency owned by the eFunds subsidiary of Fidelity National Information Services
- ATM card: It is a pin-based card. You can use it at the local ATMs and you might be able to use it to make purchases.
- PIN: Personal Identification Number
- Debit card: It is an ATM card with a visa logo or a Mastercard logo on it.
- ChexSystems: It is a check verification service and consumer credit reporting agency owned by the eFunds subsidiary of Fidelity National Information Services. It provides information about the use of deposit accounts by consumers.
