Introduction
A checking account is a fundamental part of daily banking services. It’s where you keep the money you want to spend or deposit funds you receive from your employer.
Basics of a Checking Account
A checking account is a transactional account, meaning money flows into it and out of it regularly. These accounts are designed to facilitate the receipt and expenditure of money.
Costs of Using a Checking Account
Once the money arrives in your account, you can use it to pay bills and everyday expenses. There are no fees for using the money in your account. However, many checking accounts may charge a monthly fee to keep your account open.
Ways to Spend Money from a Checking Account
When you want to spend money from your checking account, you have several options:
- Cash: You can always withdraw cash from your checking account for spending. If you are a customer of a building material bank, you can get cash from the bank’s teller. You can also use any available ATM to withdraw cash, although if you are not a member of the bank that owns that ATM, you may have to pay a fee to use it.
- Check: You can write a check, and the recipient will deposit it into their bank to transfer the money from your account to theirs.
- Debit Card: You can usually make purchases using your debit card. Unlike a credit card, a debit card pays for purchases directly from your account, instead of giving you a loan for the month. The money is deducted from your checking account electronically, and you won’t have to deal with any change.
- Online Bill Pay: Most banks and credit unions allow online bill payments using your checking account. Instead of writing checks and sending them through the mail, you can arrange payments online. You can even receive payments automatically.
- Electronic Transfers: Instead of having the bank process payments, you can provide your routing and account numbers to anyone you need to pay. They can withdraw funds from your account as a one-time transaction or through recurring payments.
- Money Transfer Apps: If you use money transfer apps like Venmo or PayPal, you can link them directly to your checking account and pay directly from your available funds.
Safety of a Checking Account
The money in your checking account is ready to be spent, but it is also secure. If your bank or credit union is federally insured, your money is protected and can only be spent by you. If the bank loses your money or fails, you won’t lose any insured funds, although there may be some delay in accessing them.
Types of Checking Accounts
Checking accounts come in various forms. Your bank may offer you several options with different features, such as a free checkbook, online bill pay, bonuses, or specific rewards. Most banks provide a debit card for free and will replace it if it’s lost or stolen.
Where to Open a Checking Account
If you are ready to open your first checking account, there are several factors to consider.
- Accessibility: You want a bank that is easy to work with and has customer support available whenever you need it. Online banks may make it easier to set up accounts at first, but you won’t have the option to visit a physical branch in the future if you need to.
- Cost: Look for a bank that keeps fees to a minimum. Online banks, or large banks that offer online-only accounts, are most likely to provide checking accounts without monthly fees. Read the terms and conditions of your account to find out how you can avoid monthly fees.
- Size: Small local banks in your community are most likely to offer free checking accounts or promotions for locals, but you will need to find a new bank if you move and may have to pay ATM fees while traveling.
- Services
Other: The ease of access and other services provided by the bank, such as mortgages or personal loans. However, large national banks may charge higher fees on checking accounts or have more difficult requirements to become a member.
How to Open a Checking Account
To open a checking account, you will need to provide identification information, including:
- Government-issued ID with your photo
- A second form of identification, such as a birth certificate
- Identification number, such as a Social Security number or passport number
You will also need to make an initial deposit, typically ranging from $25 to $100. Most banks will not open an account for minors, so anyone under 18 will need another person’s presence as a guarantor.
Whether you are banking online or in person, opening a checking account usually takes just a few minutes, and your funds will be available for spending quickly.
Source: https://www.thebalancemoney.com/checking-accounts-your-spending-money-315326
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