Understanding The Different Types Of Checking Accounts

By Matthew Cenzon. May 7th 2016

A checking account is the primary tie between most people and their banking institution, and accounts for a large part of a bank's business. When opening a checking account, there are a list of options available for you to choose from depending on your banking needs. Here is and explanation of the different types of checking accounts to help you choose the one that works best for you.

Basic Checking Account

A basic checking account is suitable to meet the needs of the average person. This will provide them with an account for ATM withdrawals, a debit card for everyday use, checks that can be written to pay bills or have recurring payments for bills, and an account for direct deposit checks from their employer. Basic checking accounts often require a minimum balance that must be kept in the account to avoid certain maintenance fees and you may be limited to the amount of checks you write per month.

Free Checking Account

This is the most popular type of checking account for the average person because it functions much like a basic checking account, but without any monthly charges. That means you can maintain any balance and write as many checks as you'd like. However, many banks will still charge you a fee under certain circumstances, like a bounced check or overdraft fees with your debit card. You may also be charged service fees from withdrawing money from an ATM that does not belong to your bank.

Over the years, banking institutions have begun to set certain limitations and added extra fees, causing free checking accounts to function more like basic checking accounts. For example, no service fees are charged to free checking accounts, but a minimum balance must be maintained, or you must have a certain amount of money in direct deposits made on a monthly basis to have any fees waived. Some banking institutions may also charge a service fee for any use of your debit card.

Express Checking Account

Express checking accounts are meant for who wish to do their banking without having to set foot in an actual bank. This type of checking account allows the same functions of a basic checking account, except for the charge for visiting a teller. That means you can write checks, use your debit card, use ATMs , and complete your banking needs online or by phone, but the moment you walk into a bank to speak with a teller, you are charged a fee.

Joint Checking Account

A joint checking account is designed for the shared use of multiple individuals, typically a married couple. This type of checking accounts has the same functions of a basic checking account, where each person listed on the joint checking account has equal access and use of the account. Other types of bank accounts, like savings accounts, typically have an option for joint usage.

Senior/Student Checking Account

Certain banking institutions target seniors and students with checking accounts that can cater to their specific needs. These checking accounts are restricted to seniors, aged 55 and older, and students who can prove they are still in school. Many senior/student checking accounts offer advantages like free checks, lower or non-existent fees for cashier's checks, money orders or traveler's checks.

Lifeline Checking Account

Lifeline checking accounts were designed for people with low incomes and are required by law in New Jersey, New York, Rhode Island, Minnesota, Illinois, Massachusetts and Vermont. Any fees or account requirements are set by the law for each state and aren't controlled by the institution.

Money Market Checking Account

A money market checking account looks a lot like a savings account, except you can still write checks from it or make withdrawals at an ATM. Money market checking accounts were meant to hold a higher balance than other types of checking accounts and can pay out interest. A certain balance set by your banking institution must be held to avoid any type of service fees. While this account acts as a combination of a checking and savings account, it is meant for limited use and transactions.

Interest-Bearing Checking Account

An interesting-bearing account will also pay out interest on a monthly basis, but also requires a certain deposit to open the account and a minimum balance to avoid service fees. The opening deposit amount and the minimum balance amount should be lower than a money market checking account, but the interest paid tends to be at a low rate. For most people, it is not worth maintaining an interest-bearing checking account for such a low return, and they're better off with a basic checking account.

Online Checking Account

Online checking accounts aren't an actual type of checking account. They are basically the checking account you enrolled in, but with the option of online banking. Many institutions offer free online banking for the type of checking account you are enrolled in. With online banking, you can pay bills, manage your account, receive paperless account statements via email, and speak with a customer service representative via online chat, and even deposit checks (certain conditions and limitations apply).

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