Everything You Need To Know About Checking Accounts
This is an article “Everything You Need To Know About Checking Accounts” by Marc Primo
Every individual who wants to save money for the long term relies on bank accounts to safeguard and monitor their finances. For some, deposit accounts usually do, others look towards credit unions, but a few still wonder what conventional checking accounts can do to help them save more. While there are various deposit accounts for numerous needs, checking accounts may be the best way to store your money while tracking daily transactions.
Based on data from the NCUA, FDIC, and the Federal Reserve, checking accounts in the U.S. decreased by an estimated 100 million from 2011 to 2017. That figure tells us that 2.2% choose to get rid of their checking accounts every year and shift to other means of banking, such as online and mobile banking.
What many don’t realize, though, is that there are still some benefits to traditional banking and maintaining checking accounts, especially if you want to save money. Digital banking makes things more convenient for your daily transactions but can be pretty challenging when you plan to reach a savings goal for the long term. A conventional checking account can be practical in how it can also save you the time and energy needed to pay your regular bills, manage your finances, or pay for services.
In this article, you’ll learn the basics and benefits of opening a checking account and how you can make them work in your money-making strategies.
What is a checking account?
For the younger generation who went straight to digital banking alternatives, a conventional checking account lets you make financial transactions with few restrictions. Individuals who have this type of account can still make cash withdrawals and use their debit cards for brick and mortar and online purchase transactions. Checking accounts can also track your transactions for every purchase or deposit and reflect it to your account within days.
Usually, when we go to the bank and open a savings account, we will be asked if we would also want a checking account. Opening up a conventional checking account gives you a deposit account or what is sometimes called a ‘spend account’ that allows you to transfer money in and out on regular periods. While a standard savings account will enable you to deposit money, checking accounts are more flexible for your outward transactions. No doubt, they give you better leverage if you look to save money rather than spend it.
Some companies also offer their employees direct deposit alternatives so they can wire paychecks directly into their employees’ checking accounts via Electronic Fund Transfers (EFT). This strategy makes everything more convenient for employees who don’t have to do anything else but check if their salaries have been transferred to their accounts.
Perhaps, the main difference checking accounts have over regular savings accounts is that it has fewer usage restrictions when handling your deposits, withdrawals, or payments.
Why you need a checking account
Other advantages of having checking accounts include easier tracking of your transactions and hassle-free payment systems for your regular bills. For example, if you have monthly obligations for your rent, your landlord will appreciate receiving checks in advance instead of cash payments as this guarantees them prompt payments.
Individuals without a checking account usually have to deal with the stress of paying billing companies in person via cashier’s check or money orders that are exchanged in cash. With a checking account, you can conveniently settle your bills directly online.
Since most billers offer their customers autopay alternatives in regular cycles, you can set up your checking account to avoid late fees that incur penalties. Having a checking account lets you sign up for autopay options that settle your monthly bills as what’s reflected in your amount due and without any hidden fees.
Setting up your auto payments via your debit card can entail more work, especially when your debit card expires or you change your address. Billers are strict regarding your current ZIP code and other personal detail updates before allowing you to enroll in auto payments via debit card.
What is the correct checking account for you?
You can open various types of checking accounts based on what you need for better financial management. Most help track your every transaction, lets you monitor your savings in real-time, and give you the convenience of arranging your daily transactions.
Here are three types of checking accounts from banks and credit unions and their respective advantages if you plan to save money for the long term:
Traditional checking account
Most individuals sign up for the most common type is the traditional checking account. Most of these types usually have monthly fees for services but come with provisions that, if met, can waive your obligatory fees.
Traditional checking accounts work best if you are also using a debit card from your savings account, are required to pay in checks when paying rent or for other billers, or regularly receive payments for your services. You get your standard bank account but with more minor inconveniences when moving money daily.
Senior checking account
Retirees or those over the age of 55 can avail of a senior checking account with certain advantages, including free checks, minimal fees, and lower minimum balance requirements. Most banks that offer this type of checking account also have at least 0.10% annual interest, ATM privileges without costs, and free money orders.
Student checking account
This type of checking account is an excellent way for younger account holders to learn about proper financial management at an early age. Student checking accounts have minimum monthly maintenance fees and more flexible minimum balance requirements, and some even offer signup bonuses. Of course, adult supervision when opening this type of account is also required.
Rewards checking account
Lastly, the rewards checking account allows you to gain incentives that may include cash backs, ATM fee refunds, and attractive discounts from a bank’s affiliate brands. Some of the best rewards-based checking accounts can even offer services without maintenance fees, which can appeal to frequent shoppers who are also looking to save up more money.