A Simple Guide To Opening A Checking Account
A checking account is a type of bank account that is typically used to keep and manage money that you plan on spending regularly. Unlike a savings account, funds are moved in and out of your checking account on a regular basis. Opening a checking account allows you to make purchases and pay bills without having to carry any actual cash on you. It also gives you an account where your paychecks can be deposited regularly. Here is an overall guide to opening a checking account, why you need one and tips for using a checking account.
Reasons for Opening a Checking Account
- A checking account will keep your money safe. Cash that you carry around or keep under your mattress can be stolen. Although cash can be stolen from a bank, it can't be stolen directly from you. Banks and credit unions are insured for this purpose.
- Checking accounts offer services that allow you to use and spend your money at your convenience. Unlike a savings account, a checking account is meant to hold money temporarily. Money is regularly deposited and withdrawn from a checking account. The funds in your checking account can also be used to write checks, make purchases with a debit card and make regular bill payments.
- It costs money to cash a check without a checking account. If you're strapped for cash, you may feel less inclined to open a checking account since you need every penny from your regular paycheck to survive. However, you're throwing away money by cashing checks without a checking account. A checking account will allow you to cash your checks for free, while cash checking businesses and services will charge you a fee.
- Checking accounts will help you leave a paper trail for your payments. Unless you have a receipt, it's difficult to track any payments made in cash. However, with a debit card or written check, there is a paper trail that can help track any money you've spent or used to make a payment.
- Easy access to your money. Unlike other types of bank accounts, a checking account offers the easiest access to your money, with multiple services that help you manage and spend your money.
Opening a Checking Account
The first step in opening a checking account is finding the best checking account that works for you. There are different types of checking accounts you can choose from depending on your needs and eligibility. Different financial institutions also offer variations of the main types of checking accounts, with different perks and services. The financial institution you decide to go with will also affect what type of checking account you choose. For example, some financial institutions may offer free checking accounts, while others require monthly service fees. Shop around, and find the financial institution and checking account type that work best for you.
An initial deposit is normally required to open a checking account. Some financial institutions may also require you to open a savings account with your checking account. Before allowing you to open a checking account, the financial institution will need your personal information, such as your full name, permanent address and Social Security Number. Your financial background may also be checked to assess how much a risk the financial institution is taking by allowing you to conduct your banking with them.
Tips for Using a Checking Account
- Make sure you read all the terms and conditions of your new checking account. You may be required to maintain a minimum balance to avoid monthly service fees. There may also be extra fees for using certain services. Don't assume anything is free until you've fully read and understood the terms and conditions of your new checking account.
- Take advantage of any free services offered. Some people may be satisfied with just using the basic functions of their checking account. However, they should utilize any free services offered since they are there for their convenience. For example, if your checking account offers automatic bill pay, take advantage of the service. It will make paying for your monthly bills quick and easy, and will help you avoid missing a payment.
- Learn how to balance your checkbook and manage your checking account. To avoid bounced checks and overdraft fees, make sure you manage the money in your checking account, regularly. If you have the option for free text message and email notifications from your bank, take advantage of them immediately.
- Use direct deposit if possible. One of the advantages of a checking account is that you can take advantage of direct deposit if it is offered by your employer. This allows your employer to directly deposit your paychecks into your checking account, saving you the trouble of doing it yourself.
- Find out what you can do without having to visit a teller. Many banks offer cash and check deposits via ATM. You can even deposit checks online with some financial institutions. Online banking and paperless statements are other convenient services that allow you to manage your checking account from just about anywhere.