Checking Account Basics

Checking accounts allow individuals and businesses to deposit and withdraw funds from federally-protected accounts at banks, credit unions, savings and loans, and other financial institutions.  Checking accounts are a safe and efficient way to pay bills and deposit money though savings accounts pay more interest.  Most checking account holders can use checks to pay debts and use debit or ATM accounts to make cash withdrawals.  Some banks require a minimal initial deposit and proof of identification when creating a checking account.  Some states grant lifeline checking account options for low income customers and the elderly.  These checking accounts usually waive fees, including surcharges for ATM usage and service fees for low balances.

While banks will send accounting statements, owners of the account must keep track of their available funds.  If a check-writer writes a check for a higher than available balance, he may have to pay overdraft fees and there may be legal action.  While some banks protect checking account holders by notifying them when an overdraft occurs, most recoup losses through heavy service charges.

Banks have various ways that allow customers to check their balances.  Banks send monthly statements of debits and deposits to account holders.  Account holders can contact banks electronically – online or by phone – to receive real time updates of their checks and balances.  Even ATMs offer an option to check the balance.  Owners should also record their deposits and withdrawals in check registers and compare the two to ensure there are no disparities.

Advantages
There are numerous reasons to own a checking account.  First, the Federal Deposit Insurance Corporation insures them, which grants the holder the security of knowing his money cannot be lost.  Second, employers can make direct deposits, which save the holder time and effort from having to deposit the money on his own.  While this is a convenient method, the holder should still look at the check to ensure there are no mistakes.  Third, checks are more secure to send by mail than cash.  When receiving a check as paid, the owner has a receipt of payment.  Should he suspect someone stole the check and it hasn’t arrived to its destination, he can even stop payment on a check or report this indiscretion to the bank for a small fee.  If cash is stolen, however, there are no like remedies.  If a check is stolen, the owner can easily change the account number as well to prevent future theft.

Fourth, online banking is very convenient and most banks presently offer this service.  Online banking benefits those who had had issues balancing accounts in the past, as they allow holders to download information in order to balance accounts.

Fees
There are some small fees to holding checking accounts, though more and more banks offer free lifetime checking accounts.  Some, in fact, offer money on every ATM purchase the holder makes.  There are also interest bearing checking accounts, which require the holder to maintain a minimum balance.