A regular checking account typically pays little or no interest, although some offer a flat interest rate regardless of your balances. Some traditional accounts don’t charge recurring fees, such as monthly maintenance fees. For example, with Discover® Cashback Debit, you can earn 1% back on up to $3,000 of debit card purchases each month.1 That can add up to $360 each year in cash back from everyday purchases.
Generally, the highest checking rates are available from online banks, community banks, and credit unions. The two checking account meaning key advantages of opening a checking account are that it helps improve money management skills and makes the management of finances in a company effortless. In the case of a savings account, the deposit amount is mainly for savings purposes, and the depositor intends to earn interest.
Account Fees
With a checking account, you don’t want to spend more money than you have in your account. You can avoid overdraft fees altogether if your bank provides overdraft protection. No, a debit card is not a checking account, but it is a tool you can use to access the money in your checking account. If you have a debit card, it will almost always be connected to a transactional account, like a checking account.
Business checking account
Your bank may also limit the number of transfers and withdrawals you can perform per month. Like savings accounts, these checking accounts earn you interest on your balance. Free checking accounts have no monthly fees and are usually found at online banks, community banks, and credit unions. When choosing a checking account, consider factors like fees, interest rates, account features, and the accessibility of bank branches or ATMs.
- However, there are banks that waive the fee if one meets specified criteria, such as maintaining a minimum balance.
- We may mention or include reviews of their products, at times, but it does not affect our recommendations, which are completely based on the research and work of our editorial team.
- Debit cards draw from the funds in your bank account, but you can also use the cards to withdraw cash at an ATM.
Checking accounts keep your money safe and accessible, and they make it easy to automate your money management. With a cash back benefit, using your debit card regularly can be a great way to earn money back on purchases you’re making anyway. Get to know what a checking account is, what it offers, and why you may want one. Finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions.
A joint account is one that is opened by two or more individuals, often marital partners. With such an account, either one of the partners is able to write checks on the account. Our partners cannot pay us to guarantee favorable reviews of their products or services.
With the right bank account, individuals can improve their money management skills. A checking account is a type of bank account that allows you to easily deposit and withdraw money for daily transactions. This may include depositing a check you receive, taking out cash with your debit card or setting up direct deposit for your paychecks.
- Banks and credit unions perform what’s called a “soft pull” when you apply, which doesn’t harm your credit score like a “hard pull” when you apply for a credit card or a loan.
- Ideally, you want to avoid paying a monthly maintenance fee to have a checking account.
- Unlike savings accounts, checking accounts generally don’t pay interest.
“DOGE is going to save X amount of money over the next couple of years. Let’s take 20 percent of that and send it right back to the hard-working taxpayers who sent it to D.C. in the first place.” Here’s what Elon Musk said and an update on what to know about the status of the refund and whether you make enough income to qualify to receive it. With these features, many customers may not need to visit a bank’s branch or ATMs.
They are typically used for daily expenses like rent, bills and utilities. The APYs earned by many interest checking accounts, however, are only a fraction of what the best high-yield savings accounts earn. Of all the bank accounts and products offered by financial institutions, checking accounts are one of the most useful — and often necessary for modern money management.
So you now know what a checking account is, why you need one, and what benefits you want most. You may have even picked the right bank and type of account for your needs. While no-fee checking accounts do exist (such as the Discover Cashback Debit account), there are still some common checking account fees that you may come across.
Interest-Bearing Checking Accounts
Financial institutions may also limit the number of withdrawals you can make from a savings account at an ATM or in person. If a bank has closed your checking account or you can’t qualify for a new one, you might turn to second-chance checking accounts, which many financial institutions offer. After maintaining the account in good standing for a certain period, you can graduate from a traditional checking account. Debit cards provide a convenient way to shop, as they’re accepted similarly to credit cards. Debit cards draw from the funds in your bank account, but you can also use the cards to withdraw cash at an ATM. Many banks offer zero-liability fraud protection to help guard against identity theft if your debit card is lost or stolen.
Some salient features of a checking account are paying bills for day-to-day purposes, purchasing items using debit cards, and receiving cash from the ATM. In short, a checking account functions similarly to a current account and offers similar features. Generally, a higher MAB gives the account holder more benefits, like a dedicated account manager, lower service charges and a higher overdraft limit. There might also be more features offered by the bank or financial institution, like payroll processing, tax payments and corporate credit cards. When you use a debit card, the funds are withdrawn from your checking account.
Using Checking Accounts Abroad
Ideally, you want to avoid paying a monthly maintenance fee to have a checking account. Generally, if you deposit funds to correct the negative balance by the end of the day, the bank will not charge overdraft fees. It is important to note that your checking account may charge fees for using an ATM not within your bank’s network. Additionally, the owner of the out-of-network ATM may impose a separate surcharge.
In reality, most account holders use their savings account to build a household emergency fund and save for major future purchases, like a house or an international vacation. GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology. Ensuring that there is no pending overdraft and that the account maintains the minimum account balance is a good way to maintain a healthy credit score.
Your checking account will likely be where you accept deposits such as your paycheck and other funds. It’s also the account you’ll probably use to make regular cash withdrawals, pay bills, send money to others, or buy food at the grocery store. While most checking accounts work similarly, the best checking accounts have no or low monthly fees and offer rewards like cash back — and some even earn interest. Most financial institutions offer FDIC- or NCUA-insurance up to $250,000 for checking accounts. This means your checking account is protected in case of a bank failure.