Basic Types of Checking Accounts

Should a person want to establish a checking account, he should do some research and look for attributes such as no hidden, ATM or bank service charges, what the minimal fees are for over-withdrawing, are there free lifetime checking and savings accounts, and if there is free online access.

Overdrawn Checking Accounts
Checking accounts are overdrawn when account holders issue checks of a higher face value than the balance of the account.  Banks will then charge overdraft fees.  Sometimes, banks will cover the checks and debit the amount on the account; other times the banks will reject the checks outright.  Unless the account holder has overdraft protection from the bank, he will likely have to pay a fee.  A holder may be overdrawn due to poor record keeping, where the holder may forget or delay to deduct the check amounts from his check register.  The chances of being overdrawn would then go up over time.

Account holders also make the mistake of anticipating their deposit will be posted prior to issued checks making it to the bank.  To ensure a holder as the funds to draw against his checking account, the banks institute some heavy fees that can be costly.  In fact, not only does the holder pay overdraft fees but also the recipient of the check at times.  Those who repeatedly write bad checks can even be arrested.  As such, it is wise to contact one’s bank should an account holder accidentally overdraw his account and make sure not to repeat this mistake.

Joint Checking Accounts
Two people can share a joint checking account.  Partners, couples, parents and children are normally the ones who choose to commingle these funds.  Both participants have equal rights to the account, and they can deposit or withdraw funds.  Should one participant begin bouncing checks, this fund may be accessible, thus affecting the other holder as well.  However, there are benefits to have join checking accounts.  They are cheaper than having one single account.  Additionally, should one party become incapacitated, the other will have full access to the funds without legal obstacles.  Joint accounts are popular for those considering marriage and partnership, though it is wise to earlier discuss how finances will be commingled.

There are, however, some arguments against having this type of account.  Those with considerable debts, if sued, end up costing the other participant because their account could be accessible to the creditors.  Both participants may also have very different spending habits. Sometimes individuals should not have joint checking accounts as, for example, if two co-habitants decided to acquire one, there would be few legal protections should one person decide to transfer all the money from the account into another.

High-Yield Checking Account
There are high-yield accounts that pay relatively high interest rates.  Here, depositors must meet certain requirement or else they will only earn a base rate of under 1%.  The conditions vary by bank; in some, balances no less than $25,000 are required for a high yield.  Financial institutions benefit from such accounts, which attract new customers.