What Is a Checking Account?

Quick Answer

A checking account is a bank account that makes it easy to access your money for daily needs and keep it safe.

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A checking account is a bank account that allows you to make regular cash deposits and withdrawals in order to manage your everyday expenses. It's an essential tool when managing finances because money can be securely stored away in a checking account yet remain easily accessible. Read on to learn how checking accounts work and things you should consider when choosing one.

What Is a Checking Account?

A checking account is a type of bank account you can use to make deposits, transfer funds between accounts, withdraw money when needed and pay bills. When you open a checking account, you're typically provided a debit card and access to online banking services that let you access your money quickly and securely.

Having a checking account is one of the most important things you can do to make budgeting easier for yourself. With a checking account, you'll better understand where your money is going because you can monitor spending patterns and track all your transactions in one place. Many accounts also allow you to set up alerts to notify you if the balance in your account drops below a set dollar amount or spending limit.

The basic features of a checking account include the following:

  • Debit cards: You can use debit cards to make purchases and also to make deposits to and withdrawals from your account.
  • Online banking: You can check transactions, pay bills and more using your bank's online banking feature.
  • Overdraft protection: Some checking accounts will authorize transactions even if you don't have enough money in your account to pay for them. You'll usually be charged a fee for this service.
  • Access to money when needed: Using a debit card or going into the bank, you can get your money, often without paying a fee to do so.
  • Ability to transfer money to yourself or another account.
  • Protection against fraud.
  • Insurance against bank failure.

Having a checking account is an essential tool for managing your money efficiently. It gives you the flexibility you need to manage your money and the peace of mind that comes from knowing that your funds are safe and secure at all times.

What Is the Difference Between a Checking and Savings Account?

Checking and savings accounts are both places to keep money, but they have some differences. A checking account is a bank account you can use to manage everyday payments like buying things or paying bills. A savings account is where you keep money you don't need right away. The money in savings accounts usually earns interest.

When using a checking account, you can take out money anytime, but with a savings account, your bank might limit how often you can take out cash.

Think of a checking account as a place for funds that meet your short-term, daily financial needs. A savings account, on the other hand, is the bucket of money you plan to use to meet your long-term financial goals.

Common Checking Account Fees

Although a checking account is an essential tool for managing your money, there are some potential fees associated with using a checking account that you should be aware of:

  • Monthly maintenance fees: The recurring amount charged to have an account with the financial institution
  • Minimum balance fees: You may have to keep a certain amount of money in the account or else be charged a fee
  • ATM withdrawal fees: Charge for using an ATM outside of the network
  • Overdraft protection/nonsufficient funds fees: Charged when you don't have enough money to cover a transaction
  • Inactivity account fee: Charged if you don't use the account enough
  • Check processing fee: Charged when you cash a check, usually a percentage of the total amount of the check
  • Stop payment fee: Charged when you request to prevent a payment from going through
  • Wire transfer fee: Charged when you send money to a receiver at a different institution

Some banks waive fees if certain conditions are met; for example, if you sign up to use direct deposit with the account. Talk to a representative at the bank you're considering opening an account at to understand what fees they charge and how to avoid them.

How to Choose a Checking Account

With so many options, choosing the right checking account can seem challenging. While different banks offer a variety of features, keeping in mind the following will help you pick one that works for you:

Assess Your Needs

First, evaluate what features you need, like online banking capabilities or the ability to make wire transfers. Most financial institutions have different tiers of checking accounts, with some offering higher interest rates if you maintain high balances.

Explore Your Options

There are different types of banks, including credit unions, online banks and traditional banks. If you need physical access to a bank branch, a brick-and-mortar bank or credit union is a good bet, but online-only checking accounts can have lower fees and more generous interest rates.

Compare Fees

Research the associated fees of different accounts to find one with low costs and no hidden charges. Ideally, you should be able to access your money without incurring additional charges.

How to Open a Checking Account

Opening a checking account is pretty straightforward, but you still need to be prepared to do the following:

  1. Research different banks and compare accounts and fees.
  2. Gather the required information and documents. You'll need a valid, government-issued photo ID and social security number.
  3. Apply online or meet with a bank representative at a local branch.
  4. Fund your account (different banks have different minimums, but they often start around $25).
  5. Activate your debit card and set up online banking features.

Once you open your checking account, learning to manage it over time helps you build good money habits and sets you up for a solid financial future, no matter where you're starting.

The Bottom Line

A checking account is a great way to manage your finances efficiently and keep your money safe. With features like debit cards, online banking, overdraft protection and access to cash when needed, you can easily budget for the future and track all your transactions in one place. By researching different banks and their offerings carefully before opening an account, you'll be able to find the best option that fits your needs to build a healthy financial future.