Checking accounts are essential tools for managing your money. They are designed to make banking easier and serve as a safer alternative to carrying large amounts of cash. There are a variety of checking accounts available and finding the right one will depend on your unique financial situation. In this blog we will guide you through the ins and outs of checking accounts so you can determine the best type for you.
What is a Checking Account?
A checking account is a banking account that you can open at a credit union, bank, or other financial institution. Funds deposited into this account can be accessed via a debit card, an ATM card, by writing a check, through person-to-person payments or via an online banking transfer.
Using a checking account lets you pay for everyday purchases such as gas and groceries without carrying cash. BankRate.com describes a checking account as a “household money management staple” because you can pay bills, make purchases using electronic transfers, write checks and use debit cards.
Types of Checking Accounts
There are several types of checking offered and these accounts vary by the type of consumer that financial institutions are interested in attracting. According to BankRate.com, the most common accounts include the following:
- Traditional Checking Account: A traditional checking account typically offers checks, a debit card and online banking. This account is intended for everyday purchases. Depending on the financial institution, a traditional checking account could be free to the user or require the user to maintain a minimum balance requirement in the account to avoid a monthly fee. These fees vary, so be sure to shop around for the best traditional checking account.
- Student Checking Account: A student checking account is targeted to youths and young adults, typically ages 12-23. To encourage more use, this account typically doesn’t have any maintenance fees. Depending on the issuer, it may include benefits such as free checks, overdraft protection and ATM fee reimbursement. For example, Travis Credit Union’s Access Checking Account comes with a debit card with no overdraft fees. Account holders can only spend up to the available balance and don’t have to worry about any overdrafts because there are no checks to write.
- Interest-Bearing Checking Account: An interest-bearing checking account is similar to a traditional checking account, but it pays dividends on your balance, starting at a certain amount. This type of account may have stricter requirements, such as a monthly minimum balance, to avoid a monthly fee and to keep you earning interest. Interest-bearing checking is great for individuals who tend to keep a higher balance in their account.
- Checkless Checking Accounts: A checkless checking account is also like traditional checking but does not offer any paper checks to use. It is usually free and relies on a debit card for most transactions. Also, this type of account may not provide overdraft services.
How to Open a Checking Account?
Opening a checking account is fairly easy. According to ForbesAdvisor, opening a checking account often requires identification of yourself with a Social Security Number, valid identification card and proof of address. Opening an account can be done in person at a branch, online, by phone and even by mail, if you don’t mind the wait.
Tips on Checking Account Use
Once you’ve found the right checking account for your financial needs, be sure you are getting the most out of it. First, ensure your account is federally insured so if something happens to your financial institution, your money remains safe. Credit union deposit accounts are insured up to $250,000 each by the National Credit Union Association (NCUA). Bank accounts are insured for the same amount by the Federal Deposit Insurance Corporation (FDIC).
Next, be sure to enroll in your issuer’s online and mobile banking systems to get the most out of your checking account. Any good online banking system will allow you to open new accounts and pay bills, deposit paper checks with your smartphone, transfer money between accounts and allow person-to-person payments using a third-party service such as Zelle or Venmo. Digital banking features allow access to your funds more readily and will save you time, according to CNBC.com.
Leveraging free ATM networks can help you avoid fees when using out-of-network ATMs. For example, Travis Credit Union is part of the CO-OP ATM Network, which offers free ATM access at more than 30,000 ATMs in the U.S. and Canada.
The Importance of Digital Banking
Mobile and online banking play a growing role in how people manage their money today. Financial institutions are incorporating more features in their mobile and online banking systems to make it easier to do most, if not all, of your banking via smartphone or desktop computer.
For example, many online banking systems now let you conveniently transfer money between financial institutions helping save you time by avoiding visits to your branch. Other online features include the ability to turn your debit cards off or on, and to set travel notifications so your debit or credit card will work overseas when you are traveling. A great online banking platform can help save you time and give you access to your funds at any time, explains CNBC.com.
Consider TCU Checking Accounts
At Travis Credit Union, we offer several types of checking accounts to fit your needs. All our checking accounts are enabled with Apple Pay® and Samsung Pay® so you can tap-and-go at the checkout line. Visit Traviscu.org to learn more. Also, our Financial Wellness Hub can help you learn how to plan, save, borrow, and spend better.