A checking account is a type of bank account that offers a safe place to store your money when you need to spend it. The checking account can be used to deposit your paycheck, receive money when you sell stocks, and make purchases.
Some checking accounts offer other services such as online banking, mobile banking app, direct deposit, and debit cards.
Opening a Checking Account
To open a checking account, you'll need to provide your bank or credit union with certain personal information like your name, address, and Social Security number. You'll also need to provide proof of your identity like a driver's license or passport, and proof of your current address like a utility bill. If you have a previous banking relationship with the institution, they may already have some of this information on file.
Bank or Credit Union
Banks and credit unions are similar in that they both offer checking and savings accounts, and they both give you access to a network of ATMs. However, they're very different in terms of structure.
Banks are for-profit institutions that offer you a variety of financial services, such as loans and credit cards. Credit unions are non-profit organizations that are owned by their customers. For example, most credit unions are "member-owned" - the members are the people who use the credit union, and they share ownership of the institution.
A debit card is an electronic payment card that holds your checking account information. When you use the card to make a purchase or withdraw money from an ATM, you are using your account's money. You can use your debit card to pay for things without using cash or a check.
You can swipe your debit card at a store to pay for items, or you can use it to get cash at an ATM. Your card is linked to your bank account, so when you use your card, the purchase is deducted from your bank account.
Debit cards are safe and convenient, but they aren't cash. You can't spend more money than you have in your account. If you use a debit card to make a purchase and don't have enough money in your account, you'll be charged a fee and could overdraw your account.
Online banking is an electronic way of using your checking account. You can use online banking to pay bills, transfer money, and deposit checks. Online banking is also a great way to keep track of your finances. To start using online banking, you will need to enroll and then you can use your bank's online services. You can enroll online, over the phone, or in person.
Mobile banking is an app or website that lets you access your checking account on your smartphone or tablet. You can use the app to transfer money, pay bills, or perform mobile check deposits. Most banks also offer mobile apps for business banking customers. The main benefit of using mobile banking is convenience. You can check your balance or review recent transactions while you're at the grocery store or out to dinner. You'll need your bank's logon information to access the app.
Many checking account providers charge a monthly maintenance fee for the bank account. Some of the most common fees are for paper statements, ATM withdrawals, or checks that are printed at the bank. Other fees are related to the number of transactions on your account. Many banks also charge overdraft fees if the account balance falls below a minimum balance threshold.
Overdraft protection is a service your bank might offer to cover the cost of transactions that overdraw your account. Overdraft protection is different than a line of credit. With overdraft protection, your bank agrees to pay the overdraft charges on your behalf, but you're still responsible for the money. If you don't have enough money in your account to cover the overdraft, your account could be closed or you could be charged an overdraft fee.