Checking Accounts

Overview

Banks and other financial institutions allow customers to create accounts for depositing and withdrawing funds. Most people need access to cash on a consistent basis for a variety of reasons: to pay bills, make regular purchases, and transfer money. Checking accounts provide people with safe, convenient, and federally insured options for storing money. With online banking it is easy to monitor your transactions to prevent unauthorized transactions from your account.

How It Works

Users can create checking accounts online or in person at a banking institution. To set up an account, you will need to deposit and maintain a minimum balance. You may also need to provide proof of income. For most checking accounts, the required minimum balance is $300.

To set up a checking account, you will need to verify your identity, so you will probably want to have access to a passport, social security card, or driver's license. Each bank will enforce its own policy for setting up an account, so you should research this information ahead of time.

You can add and withdraw money from a checking account as often as you would like. To prevent fraud, a bank will typically impose restrictions for maximum withdrawal and transaction amounts. In many situations, the account holder has the authority to override these restrictions. Banks will issue debit cards and paper checks to checking account holders. Every time you need to make a payment and you do not need to pay cash, you can use your debit card and checks to withdraw money from your banking account. A debit card resembles a credit card, but in actuality, its purpose is different. With a credit card, you spend money from a line of credit, and with a debit card, you spend cash from your bank account.

Benefits

Checking accounts are convenient and safe options for people looking to store money for everyday transactions. When you store money in FDIC-insured bank accounts, your deposits are insured for a value of up to $250,000, so it the bank fails, you still have your money.

Online banking options are available for most checking accounts, so customers can easily track transactions and expenses. Many banks will generate free reports based on a customer's spending activity. Account holders can then analyze their spending habits to become more financially efficient.

Checking accounts help people budget and manage their money. People can easily set up their checking accounts to pay bills. In many situations, people can take advantage of promotional offers to obtain a checking account for free.

Cost/Pricing

Checking account prices and fees vary between banks and financial institutions. In many situations, customers can obtain a free account by setting up additional accounts or by maintaining a minimum balance.

Banks make money by selling services and charging fees. Common services include bill payment plans and financial advising. Common fees include ATM transaction fees, and overdraft fees.

Some checking accounts will actually pay interest on your money. In general, checking accounts offer lower interest rates than other types of bank accounts.

Timing

It is a good idea to set up a checking account before you start paying bills. Most people open checking accounts when they go to college. For the most part, account holders need to be adults over the age of 18. In any case, many banks will allow children to open an account with their parents as cosigners.

Companies/Industries

Established companies include Bank of America, Wells Fargo, U.S. Bank, Chase Bank, Bank of the West, and Key Bank. Many of these banks are networked with banks all over the world in order to establish an international presence. You should select a bank that you can conveniently access from your place of residence and areas that you visit frequently.