Introduction
Checking accounts lie at the center of our financial lives, acting as the primary account where paychecks and other funds come in and where bills and other expenses exit. Like a security checkpoint at an airport, everything passes through no matter where it’s going to or coming from.
How checking accounts work
Checking accounts are transactional accounts intended for frequent use. They’re a good place to receive your payroll direct deposit, deposit checks, make credit card payments, and handle other bills and regular expenses.
Common checking account fees
Many checking accounts don’t charge monthly fees, but some banks charge fees for less common activities or for failing to maintain a specific minimum balance. Here are some of the most common checking account fees you may encounter. Check your account holder agreement to learn about the fees on your specific account.
Overdraft and insufficient funds (NSF)
You may be charged an overdraft or insufficient funds (NSF) fee if you attempt to spend or withdraw money that would take your account balance below zero. Some banks avoid overdrawing transactions and don’t charge a fee, while others allow you to go below a zero balance with an added charge.
Returned deposit item fee
When you bounce a check, you generally have to pay an overdraft fee. If a check you deposit bounces, the bank may still charge you a fee, even though you are not at fault.
Monthly maintenance fees
Some banks will charge a monthly fee if your account balance drops below a specific minimum or average daily balance. That said, the best checking accounts have no minimum balance requirements or monthly fees.
ATM fees
When you withdraw cash from an ATM not owned by your bank, you may be subject to an ATM fee. Some banks charge fees for out-of-network ATMs, and most ATM owners charge fees when using another bank’s ATM card. However, some banks don’t charge any ATM fees and even reimburse fees charged by other ATMs.
Foreign transaction fees
Many banks charge foreign transaction fees when you use an ATM or debit card outside of the United States. These fees are related to the additional expense of converting to a foreign currency and interacting with an international ATM or payment network.
Paper statement fees
Some banks charge monthly fees if you opt to receive your bank statement in the mail rather than digitally through online banking. You can avoid paper statement fees by opting for online-only statements.
Different types of checking accounts
While checking accounts offer many of the same features, some are designed for a specific purpose. Examples include the following.
- Traditional checking. Traditional checking accounts offer check writing services, unlimited electronic deposits and withdrawals, ATM access, and branch banking, where you can deposit and withdraw cash.
- Online checking. Online checking accounts offer most of the features of a traditional account, except you can’t visit a brick-and-mortar bank branch for in-person transactions. Most online checking accounts charge much fewer fees than accounts from traditional banks.
- Interest-bearing checking. While many checking accounts don’t pay interest, some now include monthly interest based on your account balance, similar to a savings account.
- Student checking. Student checking accounts are low-fee accounts geared toward post-secondary students. Be aware that some student accounts convert into different accounts after several years.
How to choose a checking account
If you need to deposit cash regularly, you’re likely better off with a traditional checking account from a bank or credit union with branches in your local area.
Low fees
Chime is an online bank with almost no fees. There are no monthly fees, minimum balance requirements, and no overdraft fees for the first $200 thanks to a feature called “SpotMe.” Chime partners with ATM providers to offer more than 60,000 fee-free ATMs.
In-person banking
Chase Bank is a good option if you prefer to bank in person. Chase operates over 4,700 branches and over 15,000 ATMs nationwide and offers several checking accounts. Monthly fees may apply if you don’t meet minimum balance or activity requirements.
High yield
Quontic Bank offers its High-Interest Checking account, with interest rates that are superior to most banks. To earn the top rate, you’ll need to make at least 10 monthly debit card transactions of $10 or more. Its Cash Rewards Checking features 1% cashback up to $50 monthly. Accounts have no monthly fees or overdraft fees.
ATM fee reimbursements
CIT Bank, a part of First-Citizens Bank & Trust Company, offers an online checking account called “eChecking.” If you regularly need cash, you’ll enjoy up to $30 in monthly ATM fee reimbursements for fees charged by other banks. Account holders also have access to the Zelle network and other common online banking tools. CIT Bank pays a modest interest rate, which varies depending on your balance.
Traditional checking
First Citizens Bank has three checking account options with robust online features and branches in 21 states. The free checking account has no monthly fees if you opt for paperless statements. Premier and Prestige checking accounts offer perks with other accounts but charge monthly fees unless you meet certain minimum requirements.
How to open a checking account
Opening a checking account is easy if you have all of your personal contact information handy. In most cases you’ll need to provide information, including your full legal name, address, phone number, and Social Security number.
How many checking accounts can I have?
While some banks may limit the number of checking accounts at that specific bank, there’s no limit to the number of checking accounts you can hold. If you want multiple checking accounts at various banks, there’s no rule or law against doing so. However, keeping close track of all accounts is important to spot potential problems quickly.
Is a debit card a checking account?
Debit cards are typically not stand-alone checking accounts. In most cases, your checking account comes with a debit card, which allows you to access ATMs or make purchases directly from your account balance. Some debit card accounts are available as stand-alone products, with many features found in checking accounts.
TIME Stamp: A checking account is central to your financial life
A checking account is one of the most important financial accounts you can have. It’s the financial nerve center where funds enter and exit your finances. Picking the best checking account for your personal goals and needs can help you avoid fees and stay on track to meeting your financial goals.
Related; bagey.net/2024/04/17/what-is-a-checking-account
Frequently Asked Questions (FAQs)
Do checking account activities impact your credit score?
Checking account activities don’t appear on your traditional credit report or influence your credit score. Negative banking information is kept by a separate credit reporting agency called ChexSystems. Credit reports focus on information from loan accounts, such as credit cards, car, student, and mortgage loans.
What is the best interest rate offered on a checking account?
Checking account interest rates change regularly. If you want the best rate, look for a high-yield checking account and note the bank’s requirements to earn the top interest rate. Alternatively, consider a high-yield savings account to get the most from your bank account balance.
Where is the account number on the check?
You can find the routing number, account number, and check number encoded at the bottom left of the check. The account number, usually anywhere from eight to 12 digits, is the middle number printed between two symbols. The left number is a nine-digit number representing the bank’s routing number, and the number on the far right is the check number.