Banking 101: What Is a Checking Account? - NerdWallet
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Banking 101: What Is a Checking Account?

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The Basics

A checking account is the most commonly used bank account. Checking refers to the act of writing a check to transfer money from your account, but nowadays, you also have the option of using a debit or ATM card to withdraw or transfer funds. Checking accounts differ from other accounts, like savings accounts or CDs (Certificates of Deposit), in that there are few, if any, restrictions on how often you access your money. Some even come with checking account bonuses, like cash and gift cards, just for signing up.

Finding the Best Account

Because checking accounts are so frequently used, and because they are very basic accounts, most people don’t realize there are options that fit certain consumers better than others. Here are some of the most popular types of checking accounts.

  • Free Checking Accounts: Some regular checking accounts come with monthly service fees or minimum balance requirements, which can be tough on lower-income individuals who cannot afford to pay fees each month. Fortunately, many credit unions and banks offer free checking accounts that do not have these monthly fees or balance requirements.
  • Online Checking Accounts: A number of banks offer online checking accounts that allow you to conduct all your account transactions on the Internet. These accounts are designed for consumers who enjoy the ease and accessibility of electronic banking, and they also offer perks like competitive interest rates, mobile check deposit and ATM fee refunds.
  • Rewards Checking Accounts: If you use your checking account frequently, and are looking for something extra, rewards checking accounts provide benefits like above-market interest rates, rewards points and ATM fee refunds. As an added bonus, most rewards checking accounts are also free, even if you don’t meet the monthly requirements to earn rewards.
  • Teen Checking Accounts: Teen or youth checking accounts are a great option for young consumers testing the waters of personal finance. These accounts can be found at credit unions and banks, and tend to require a parent or guardian to co-sign. They often come with financial education advice and other helpful perks directed at teens and young adults.

Where to Bank

Now that you know what a checking account is, you can decide where to open one.

  • Credit Unions: Credit unions are not-for-profit cooperatives (which means they prioritize their members’ financial well-being over the credit union’s success) that often have membership fields based on location or employment.
  • Banks: Banks come in many sizes, from global banks to hometown community banks, and each has unique deals and special services depending on their areas of service.
  • Online Banks: If you are a bank-on-the-go kind of person who doesn’t need to visit a physical bank branch very often, online banks are a great option, as they tend to offer higher interest rates on checking accounts, as well as other perks.