What is a checking account and how does it work?


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A checking account is a way to keep your money safe and accessible for short-term spending needs. A bank manages the account, allowing you to deposit money and then withdraw it to pay bills, run errands, or meet other financial needs.

Debit cards and withdrawals

When you open a current account, the bank will issue a debit card linked to the account. You use the debit card much like a credit card, but no interest is charged on purchases. Debit cards have largely replaced paper checks for retail transactions.

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There is no limit to the number of withdrawals you can make from a checking account, but each bank sets a daily dollar limit for ATM withdrawals, usually ranging from $300 to $5,000.

There are several other ways to access money from a checking account:

  • Make a paper check payable to the person or business you are paying
  • Online transfer from current account to another account
  • Cashing one of your checks at the bank or elsewhere

Watch the fees

Banks provide free checking accounts. For large accounts, the bank may even pay interest on the money you deposit. But they’ll also charge hefty overdraft fees — usually around $30 — if you overextend your account.

Writing a check for more than you have in the account is risky. In the past, it took several days for banks to process checks. Now checks can be converted by payees into electronic files and sent to your bank for payment the same day you write them.

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The solution is overdraft protection. The bank will draw funds from another current account to cover the costs or provide a short-term loan. Courtesy fees may be charged for this service.

Online banking

Many current account functions are now automated or performed online. If you receive a regular paycheck, your employer may be able to automatically deposit the funds directly into your checking account. This saves you a trip to the bank (deposits can also be made at certain bank ATMs).

You can also set up automatic bill payments for utilities, car payments, or anything that’s supposed to be paid monthly. If a bill is due soon and you don’t trust the courier, you can also phone the recipient and ask them to withdraw the money from a checking account.

You will need to give your account number and a routing number – the bank’s unique identifier. Always be careful and keep these numbers in a safe place. Don’t give them to any company you don’t fully trust, and don’t write these numbers down or keep them on your phone.

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How to open a checking account

You can open a checking account by visiting a bank branch and requesting an application. You will need a valid ID and your social security number. The bank will check for any past problems you may have had with other bank accounts.

It may also be possible to open an account online. The bank can mail you personalized paper checks. Monthly account statements will also arrive this way, but many banks make them available online through your account portal. Your balance, transactions, and any fees charged will also appear online.


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Types of checking accounts

There are different types of checking accounts to consider, depending on your personal needs.

Joint checking account

In addition to individual accounts, banks offer joint accounts, a useful alternative for married couples or partners. Joint accounts are also used by custodians, which means that a parent and a minor child both have control of the money.

Anyone helping disabled or elderly parents manage their finances, for example, can also create a joint account.

Student current account

Some banks offer student checking accounts to those who are just beginning their financial journey. Accounts may be offered by institutions that also provide student loans or by credit unions established on or near campus. Low fees and low account minimums appeal to anyone on a tight budget.

Online checking account only

Online accounts are now available at new-style digital banks such as Ally and Synchrony. But, with bank accounts, it’s a good idea to consider the convenience factor. Online means no physical branches for face-to-face service and possible fees when using an ATM. On the bright side, digital banks can offer higher interest rates and a no-fee policy.

This article was republished on April 26, 2022. Information is accurate as of March 10, 2022.

About the Author

A writer/editor with over 100 book credits in the youth and young adult non-fiction format, Tom Streissguth has mastered the art of explaining complex and difficult subjects clearly. His books have covered history, geography, economics, media and current affairs; he has also written biographies of historical figures for Lerner, Enslow, Facts on File, Greenhaven, and other major educational publishers.


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