What is a Checking Account?
With a checking account, physical paper checks or electronic checks are used to withdraw money from a bank account. Checks may be used for a variety of financial purposes such as: to pay bills, purchase products and services, send money to other people, and many other common uses. Bank checks can also be used to transfer money to accounts at other financial institutions. Bank checking accounts provide quick, convenient, and frequent access to the money in the bank account.
Typically, deposits can be made into the checking account as often as you choose and may be withdrawn at any time. Most financial institutions allow you to withdraw or deposit funds at an automated teller machine (ATM) or to pay for purchases at stores with an ATM or Debit card.
Interest Bearing Checking Accounts
Some checking accounts pay interest; others do not. A regular checking account, which is also called a demand deposit account – does not pay interest, whereas a negotiable order of withdrawal (NOW) account does.
Financial Institutions may impose fees on checking accounts, besides a charge for the checks you order. Fees vary among institutions. Some institutions charge a maintenance or flat monthly fee regardless of the balance in your account. Other institutions charge a monthly fee if the minimum balance in your account drops below a certain amount any day during the month or if the average balance for the month drops below the specified amount. Some charge a fee for every transaction, such as for each check you write or for each withdrawal you make at an ATM. Many institutions impose a combination of these fees.
Although a checking account that pays interest may appear more attractive than one that does not, it is important to look at fees for both types of checking accounts. Many bank checking accounts that pay interest charge higher fees than regular checking accounts, so you could end up paying more in fees than you earn in interest.