Checking Account Basics
Checking accounts can be opened at any bank and are very basic and useful bank accounts. Individuals can deposit cash or checks into the checking account and access that money by writing checks, taking out cash or by using a debit card. (A debit card is not like a credit card. When an individual uses a debit card it takes the money directly out of the checking account.) Unlike other types of bank accounts, these days a checking account does not generally earn interest, but is simply a safe place to keep money and to easily access that money. While every bank offers a checking account, the requirements may differ between banks. Banks usually offer different types of checking accounts to accommodate each personal situation. Some things to pay attention to when opening a checking account may include monthly service fees, the amount of the initial deposit, the amount of money that has to be in the account at any given time and other fees and costs. It is important to shop around for the right bank account and find one that is not too restricting.
How to Open a Checking Account
Opening a checking account can be very simple and easy. Generally, an individual will only need their ID, proof of address and an initial deposit to open a checking account. The initial deposit, as of now and depending on the bank, will often range anywhere from $7 – $100. This money can be used once it is deposited, but must be handed over to the bank to first open the account. Some banks may also run a credit report or previous bank history.
How to Use a Checking Account
Putting money into a checking account and accessing that money is very simple and can be done any time of the day. Money can be deposited into a checking account by depositing cash or checks, setting up direct deposit with an employer or transferring money from other accounts. These transactions can be made at an ATM machine, a bank teller, on the phone, or online. Accessing the money in a bank account is just as easy as depositing it. When an individual opens a checking account they will receive personal checks, an ATM card and/or a debit card. Checks can be written to pay bills or make certain purchases. An ATM card allows you to take out money at an ATM machine. A debit card combines both of these options. With a debit card you can make purchases at stores or online, pay bills by providing your debit card number or withdraw cash by using an ATM machine. Checks, ATM cards and debit cards make paying bills and spending money convenient to do without carrying cash.
Costs and Fees of a Checking Account
Costs and fees of checking accounts are usually fairly low, and most of the time there are ways to get around paying these costs and fees. These costs and fees can include monthly service fees, overdraft fees, the use of ATM machines, inactive accounts, and checks. Monthly service fees can range from $0 – $12. These fees can usually be avoided by keeping a certain amount of money in your account, setting up direct deposit with your employer, or by banking online only. Overdraft fees are when money is spent that is not in an account. For example, if there is $130 in an account and a purchase is made with a debit card or check for $134, an overdraft fee will show up on the account. This fee can be up to $30 for each purchase made after there are insufficient funds. Many banks offer overdraft fee protection plans. Fees may also be charged if an ATM machine is used that is not owned by the account holders bank. For example, if someone has a checking account with Wells Fargo but uses a Bank of America ATM, they may be charged by one or both banks. Accounts that are not used very often or for a certain amount of time may also be charged fees.
How to Keep Track of the Money in a Checking Account
Because there is no limit on how often deposits and withdrawals can be made, it may be difficult to keep track of how much money is in the checking account. However, this is very important to do so to avoid overdraft fees. There are many ways to check your balance, or how much money is in the account. Banks will usually mail a bank statement once a month. This bank statement will list each deposit and withdrawal that is made within a month, as well as the current balance. Individuals may also learn to balance their checkbook and keep track of receipts to keep up with their spending and balance themselves. Bank statements and current balances can also be found online for those with internet access. Individuals can also check their balances at ATM machines or by phone.
Things to Consider When Opening a Checking Account
Because the terms of service differ between banks, it is important to find the best option for each personal circumstance. Some important things to consider are: – what is the initial minimum deposit? – is there a minimum balance that must be kept each month? – will there be fees if direct deposit is not set up? – what are the overdraft protection plans? – are there options for senior citizens, students or those with low incomes? – are there convenient bank locations or ATM machines close to work or home?
Checking Account Cons
1. Many checking accounts do not pay interest as of now, but are mainly used to keep money in the bank and have easy access to it. 2. Monthly charges and fees may add up. Individuals must keep track of their deposits, withdrawals and account activities to avoid monthly fees and charges.
The Benefits of a Checking Account
1. It is a safe place to keep money 2. You do not have to keep large amounts of cash on you 3. Accessing money is easy and convenient 4. ATM machine are easily accessible 5. Debit cards can be used almost anywhere 6. Automatic payments of monthly bills can be set up so that bills are never late or overlooked 7. Checks can be mailed to pay bills, instead of having to visit payment stations
8. Online banking options are available