By Aly J. YaleHow Many Mortgages Can You Have?
Quick Answer
For primary residences, there is no limit to how many conventional loans you can have, but for second home and investment properties, the limit is 10. Government-backed mortgages limit you to one or two loans maximum under most circumstances.
When it comes to managing your money, the best bank account is the one that gives you easy access to your money and flexibility. A checking account is often considered the best type of bank account to start with. It allows you to conveniently deposit and withdraw funds, pay bills and make everyday purchases.
Here's an overview of key features of checking accounts, their pros and cons, how to open a checking account and alternatives to consider depending on your financial goals.
What's the Best Type of Bank Account to Start With?
Having a bank account is the norm for U.S. adults—94% have one, according to the Federal Reserve's 2024 survey on economic well-being. For most people, a checking account is the best type of bank account to start with. It's designed for everyday use and offers ongoing access to your money.
A checking account lets you deposit funds through several methods, including cash, checks, direct deposit and bank transfers. Once money is in your account, you can spend or move it in a variety of ways: using a debit card, setting up automated clearing house (ACH) transfers, writing checks or sending money through peer-to-peer payment apps.
Opening a checking account is a smart first step toward building your financial foundation. It gives you a centralized place to organize your finances and plan for upcoming expenses. With most of your financial activity flowing through one account, you can have a clearer picture of your money habits.
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What to Look for in Your First Checking Account
Banks and credit unions offer several types of checking accounts with a variety of features. If you're opening a checking account for the first time, here are some key features to look for:
- Low or no fees: Checking accounts can come with a range of fees that can add up over time. This includes monthly maintenance fees, overdraft fees and ATM fees. You can avoid most checking account fees by managing your account responsibly, but it's important to know what you could be charged under certain circumstances.
- Overdraft protection: This feature allows transactions to go through even when your balance is low. Overdraft protection often comes with a fee, though some banks limit or waive fees, or offer the option to link to a savings account.
- Mobile and online banking: A digital platform makes managing your money easier. Features like mobile check deposit, bill pay, account transfers and alerts can save you time and prevent costly mistakes.
- Account alerts: Stay informed on your account activity with notifications for low balances, failed transactions, upcoming recurring payments and more. These alerts are especially helpful if you're trying to stick to a budget or catch fraud early.
- FDIC or NCUA insurance: Your money is protected when your checking account is backed by the Federal Deposit Insurance Corp. (FDIC) or National Credit Union Administration (NCUA). This insurance protects up to $250,000 per depositor, per bank or credit union if the institution fails.
- ATM access: If you need cash, a bank or credit union with a large ATM network gives you free access to ATMs in your area. Some banks reimburse out-of-network ATM fees charged when you use an ATM owned by another operator.
Learn more: Tips to Choose the Best Checking Account
Pros and Cons of Checking Accounts
Before opening a checking account, it's helpful to weigh the benefits and drawbacks.
Pros
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Easy access to funds: Use your debit card, an ATM, mobile app or checks to make payments and withdrawals. You can even add your debit card to your mobile wallet for increased flexibility.
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Direct deposit: Paychecks and government benefits can be deposited directly to your checking account instead of receiving a paper check. This saves on check cashing fees and allows you to access your money faster.
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Free bill pay: Set up one-time or recurring payments for rent, utilities and other expenses to make managing bills easier. Automating bill pay can help you avoid late fees and keep your accounts in good standing.
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Multiple access options: You can manage your account online, via mobile app, over the phone or in person. These options allow you to easily deposit checks, freeze your debit card and transfer money between accounts.
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Financial foundation: A checking account helps you establish a financial history and hone your financial management skills.
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Joint account option: Share an account with a partner, spouse or family member for shared budgets.
Cons
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Low or no interest: Most checking accounts don't earn interest, especially those with no fees. Those that do earn interest often have tiers or requirements for earning the best interest rate. If you can't maintain a high balance, you may not earn enough interest to offset the monthly account fee. Opening a savings account in addition to a checking account can help you earn more money.
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Fees: You might incur overdraft, ATM or maintenance fees if you don't meet account requirements. Paying fees eats away your balance, leaving you with less money for your spending needs.
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Minimum balance requirements: Some accounts require you to keep your balance above a certain level to avoid triggering a fee. Depending on your income and spending, you may have a hard time maintaining a specific account balance.
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Deposit holds: Banks may place holds on large or suspicious deposits, preventing access to funds. Holds can last from two to seven business days, depending on the reason.
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Spending and withdrawal limits: Some banks impose limits on the dollar amount of debit card purchases and ATM withdrawals you can make each day and each transaction. These limits can prevent you from making important purchases or cash withdrawals.
How to Open a Checking Account
Opening a checking account is straightforward. Here are the steps:
- Choose a bank or credit union. Decide whether you prefer a traditional bank, credit union or online-only institution. Keep in mind that you'll have to meet membership requirements to open an account at a credit union.
- Compare accounts. Many banks have multiple types of checking accounts like interest-bearing accounts, student accounts and second-chance accounts. Compare features like fees, mobile app quality and ATM access to narrow your options.
- Gather your documentation. Typically, you'll need a government-issued photo ID, Social Security number, proof of address and initial deposit.
- Complete the application. Apply online or in person. You'll provide basic personal information like your name, address and phone number. Applications usually take less than 10 minutes.
- Make your initial deposit. Once you're approved, you can make your first deposit by bank transfer; with a credit, debit or prepaid card; or cash if you're applying in person.
Tip: If you're already a customer, your existing bank may offer faster approval when you log in to complete your application.
Learn more: What Documents Do I Need to Open a Bank Account?
Other Types of Bank Accounts to Consider
Depending on your financial needs, you might benefit from other account types:
- Traditional savings account: Designed for storing money and earning interest, savings accounts are ideal for emergency funds or saving for goals. Many banks cap monthly withdrawals which limits account access.
- High-yield savings account (HYSA): Mainly offered by online banks, HYSAs pay higher interest than standard savings accounts, allowing you to earn more on your account balance.
- Money market account (MMA): This is a hybrid account that combines features of a checking and savings account. MMAs offer higher interest rates and check-writing or debit access. These may have higher minimum balance requirements.
- Certificate of deposit (CD): Earn a higher interest rate on money that you won't need for a while. The money you deposit in a CD isn't liquid, so if you access a CD before it matures, you may pay an early withdrawal penalty.
- Brokerage checking account: This is a type of investment account that offers traditional checking account features and the ability to invest your balance in assets like stocks, mutual funds and exchange-traded funds.
Learn more: How Many Bank Accounts Should You Have?
Frequently Asked Questions
The Bottom Line
A checking account is one of the most useful financial tools you can have. It offers convenience, flexibility and control over your day-to-day finances. By understanding the key features, weighing the pros and cons and comparing account options, you can find the right account for you.
If you're thinking about opening a new checking account, the Experian Smart Money™ Digital Checking Account & Debit Card can help you build credit without debt by automatically linking to Experian Boost®ø, which gives you credit for eligible bill payments after three months of payments. You'll also pay no monthly fees¶ for Experian Smart Money, have access to more than 55,000 fee-free ATMs worldwide** and could receive your paychecks up to two days early when you enroll in direct deposit†. You can get an Experian Smart Money Account through a free or paid Experian membership, which also gives you access to your FICO® ScoreΘ, Experian credit report and more. See terms at experian.com/legal.
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About the author
Aly J. Yale
Aly J. Yale is a writer and editor based in Houston. Over the past 15 years, she has covered personal finance, mortgages, real estate, investing, insurance, credit cards and lending, among other financial topics.
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