You need a safe environment to keep your money that also allows you easy access to it.
This is where a checking account can help.
A checking account is an account that you have with a bank.
They hold your money and allow you to withdraw it, buy things with it and pay bills with it. The bank will issue you checks, a debit card and/or an ATM card. Your ATM card can only be used to withdraw cash from an ATM (automated teller machine) and your checks can only be used to make purchases or pay bills; your debit card can combine these conveniences and do both. Your debit card can be used like both a check and a ATM card. You can use it to make purchases at a store or online, as well as to draw cash out of an ATM. You may also be able to set up automatic withdraws in your checking account so that your bills as paid on a certain day each month, automatically.
There are several types of checking accounts:
- Basic – A place to keep your money and a way to get a debit card or checks. They may be free or require a minimum deposit and a minimum balance.
- Joint – A checking account you hold with another person.
- Interest-bearing – These account give you interest on your money and usually require a higher minimum balance than non-interest bearing (and hence the higher interest).
- NOW account (Negotiable Order of Withdrawal) – These are not technically checking accounts. They are deposit accounts that give you interest and allow you to write checks against the money in the account.
Checking accounts are an important tool for many people and businesses.
While it would be risky to carry around $1,000 to pay your bills, get groceries, and go to the mall all in one day, you can do all of that with a checking account without the risk of being robbed or losing some of your money.
Checking accounts also provide convenience.
Instead of driving to individual payment stations to pay all of your bills, you can mail checks or do it all online within minutes. This saves money on gas and frees up you time for other things.
[Related: Best Free Online Checking Accounts]
Make sure you do your research before you open a checking account to make sure the account you are looking at fits your needs.
While many checking accounts are free many also be fees you need to be aware of such as minimum balance fees and fees for each check used. Shop around to find what best suits you.
What kind of checking account do you have?