Though you can use checking accounts for check writing, you’ll probably use a debit or ATM card to access the money in your account more often. Checking accounts are used for day-to-day cash deposits and withdrawals. Banks and credit unions offer them, and you can access your money with a debit card, through online transfers or by writing checks. They are typically federally insured up to $250,000 by either the Federal Deposit Insurance Corp. or the National Credit Union Administration. Interest-bearing checking accounts often allow you to earn a certain APY in exchange for having your paycheck directly deposited or making a minimum number of monthly debit card transactions.
High school student accounts typically require parent involvement as a co-owner or co-applicant, while those for college students do not. Premium checking accounts offer benefits beyond what you get with a standard account. Perks vary by bank and can include interest payments, waived fees (e.g., free notary services and free money orders), free financial advice, and discounts on the bank’s other financial products. At some banks, you can earn reward points when you make purchases, which can be redeemed for eligible products and services.
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- Now that we’ve outlined some of the basic considerations that go into choosing a checking account, here’s a list of some of the different types offered by most banks.
- How much you plan on keeping on average every month will help you decide which type of checking account to open up.
- In general, online banks offer perks like lower fees, better interest rates, convenience, and free ATM access to a typically large network of ATMs.
- An interest-bearing checking account combines the liquidity and accessibility of a traditional checking account with the added benefit of earning interest on your account balance.
- Be sure to read the trust agreement and follow any rules before opening an account.
To do this, check all the transactions on your statement against your entries to ensure everything matches, that you haven’t left anything out, and that there aren’t any math errors. If it doesn’t balance, start by looking for transactions that may not have gotten recorded, and then check your math. You can schedule or make automatic payments for usual utility and rent bills. You can even pay another person electronically or with a bank-mailed paper check, often at no cost.
Student checking accounts are designed specifically for young borrowers who are still in school. They include the same features as a traditional checking account but may include extra protections for young consumers still learning to be financially independent. While these accounts typically have an age limit, the exact ages that qualify for a student account vary from bank to bank. If you have any questions, don’t hesitate to reach out to a bank representative, either in person (at a local branch) or by using the bank’s online chat feature (if available) or customer service phone line. With an interest-bearing checking account or high-yield checking account, you earn interest on the money in the account—just as you would in a savings account. Unlike a savings account, however, you’ll be able to write checks and use your debit card to make purchases and pay bills.
Low-Balance Checking Accounts
The APYs earned by many interest checking accounts, however, are only a fraction of what many high-yield savings accounts earn. A standard checking account typically includes basic features such as check-writing capabilities, ATM access, and online banking. These accounts are suitable for everyday use, allowing you to deposit money, make payments, and withdraw cash as needed. They may require a small monthly fee or be fee-free if certain conditions are met. outstanding shares overview and where to find them Some banks offer student checking accounts for high school students and college students. These accounts feature perks such as low or no maintenance fees and no minimum balance requirements.
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For example, a bank might not charge a maintenance fee if you make a certain number or amount of direct deposits. You may still have to pay for other services, including out-of-network ATM fees, check fees, overdraft fees, stop payment fees, and foreign transaction fees. These accounts may not pay any interest, as you’re already getting the benefit of not paying a monthly fee. You may be better off with a free checking account, even if it pays less or no interest. As for the discounted services and free advice, you may get a better rate on services or better advice from another institution. A checking account is one of the most basic types of accounts you can open with a bank.
Your bank could send that item to collections if you don’t repay an overdraft loan. For example, if you have $50 in your checking account and buy a shirt for $70 using your debit card, the bank might approve the purchase transaction. However, the bank might charge a $20 overdraft fee for that purchase or any other purchases until you add money to your account. If your account remains overdrawn, your bank also might charge daily interest.
In general, online banks offer perks like lower fees, better interest rates, convenience, and free ATM access to a typically large network of ATMs. However, online banks don’t offer in-person assistance, which means you’ll have to sort through a touchtone phone menu to reach a real person. If you have money you don’t intend to spend right away, consider a savings account. Those typically pay a higher rate of interest, but may place limits on monthly withdrawals, do not offer check writing, when should you adjust your paycheck withholdings and may not have a debit card (although you may receive an ATM card). Checking accounts are typically used to make frequent deposits and withdrawals and to cover everyday expenses. Meanwhile, a savings account holds money for medium- and long-term needs.
If you do find a checking account that pays interest, it will usually offer lower rates than a savings account. Sometimes known as “lifeline accounts,” these accounts are designed for customers who can only maintain a small balance but still want access to banking services. However, the bank might limit the number of checks you can write or require paperless statements. Whatever your financial situation, there’s a checking account for you—as long as you don’t have a history of fraud and meet basic account-opening requirements such as proof of identity.
Business Checking Accounts
Once you’ve maintained your account in good standing for a certain period—perhaps a year—you may become eligible for a regular checking account. Interest-bearing checking accounts give you a small return every month for the balance in your account. Some accounts pay a flat interest rate regardless of your balance, while others pay more on higher balances. How much you plan on keeping on average every month will help you decide which type of checking account to open up.
Because they don’t offer teller service, many of these banks allow you to use different banks’ automated teller machines (ATMs) as well, which makes cash withdrawals easier and cheaper. Although you may not collect much, some checking accounts do pay interest. If you want to earn a little more—remember, that’s a little more—you can find a bank that gives you interest along with a place from which you can do your everyday banking. Interest is generally calculated on a daily basis and deposited directly into the checking account at the end of each month.
With $0 minimum to open online and Low Cash Mode® to help avoid overdrafts. Amy Fontinelle has more than 15 years of experience covering personal finance, corporate finance and investing. Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. “Expert verified” means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity.
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