5 facts about checking accounts

Banking in today’s world generally means opening a checking account, a savings account, or both. Checking accounts, also called transaction accounts, are set up to allow frequent receipt (deposit) and payment (withdrawal) of funds in the account.

Meanwhile, the savings variety is designed for individuals to use in order to accumulate savings over longer periods of time. Savings accounts generally allow you to earn interest on the amount deposited, although some checking products now offer an interest option as well.

If you don’t have your own bank account, you’re missing out on many of the biggest banking innovations of the last decade, including online banking, tens of thousands of places to use your debit card, and innovative products like checking accounts that They do not charge overdraft fees.

Here are 5 facts about checking accounts:

1. You can open one with just a small initial deposit, in most cases around $50.

2. Most checking products offered by banks today are all free accounts. However, anyone who has been an account holder for more than a few months knows that “free” accounts are often far from free. For example, some require you to maintain a minimum balance to avoid a monthly fee. Others charge various usage fees (see #4 below).

3. Many checking accounts offer automatic enrollment in an overdraft protection program. While this service is consumer-protective in that it helps avoid bounced checks and/or unpaid merchants, it does come with a major drawback: a fee of $20, $30, or more is charged each time the account is overdrawn. These accounts actually become very expensive for the account holder very quickly. Fortunately, some banks now offer checking accounts that will never charge you an overdraft fee, even if you overdraw the account multiple times.

4. You can open a new account online often in a matter of 15 minutes or less.

5. Some checking accounts pay interest on the amount deposited. Still, restrictions often apply and, in most cases, the interest rate paid is not as high as a savings account at the same bank. Consider getting both types of accounts.

If you’re considering opening a checking account, make sure you get all the facts before choosing a bank that suits your needs.

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