A checking account is the primary tie between
most people and their banking institution, and accounts for a large part
of a bank's business. When opening a checking account, there are a list
of options available for you to choose from depending on your banking
needs. Here is and explanation of the different types of checking
accounts to help you choose the one that works best for you.
Basic Checking Account
A basic checking account is suitable to meet the needs of the average
person. This will provide them with an account for ATM withdrawals, a
debit card for everyday use, checks that can be written to pay bills or
have recurring payments for bills, and an account for direct deposit
checks from their employer. Basic checking accounts often require a
minimum balance that must be kept in the account to avoid certain
maintenance fees and you may be limited to the amount of checks you
write per month.
Free Checking Account
This is the most popular type of checking account for the average
person because it functions much like a basic checking account, but
without any monthly charges. That means you can maintain any balance and
write as many checks as you'd like. However, many banks will still
charge you a fee under certain circumstances, like a bounced check or
overdraft fees with your debit card. You may also be charged service
fees from withdrawing money from an ATM that does not belong to your
bank.
Over the years, banking institutions have begun to set certain
limitations and added extra fees, causing free checking accounts to
function more like basic checking accounts. For example, no service fees
are charged to free checking accounts, but a minimum balance must be
maintained, or you must have a certain amount of money in direct
deposits made on a monthly basis to have any fees waived. Some banking
institutions may also charge a service fee for any use of your debit
card.
Express Checking Account
Express checking accounts are meant for who wish to do their banking
without having to set foot in an actual bank. This type of checking
account allows the same functions of a basic checking account, except
for the charge for visiting a teller. That means you can write checks,
use your debit card, use ATMs , and complete your banking needs online
or by phone, but the moment you walk into a bank to speak with a teller,
you are charged a fee.
Joint Checking Account
A joint checking account is designed for the shared use of multiple
individuals, typically a married couple. This type of checking accounts
has the same functions of a basic checking account, where each person
listed on the joint checking account has equal access and use of the
account. Other types of bank accounts, like savings accounts, typically
have an option for joint usage.
Senior/Student Checking Account
Certain banking institutions target seniors and students with
checking accounts that can cater to their specific needs. These checking
accounts are restricted to seniors, aged 55 and older, and students who
can prove they are still in school. Many senior/student checking
accounts offer advantages like free checks, lower or non-existent fees
for cashier's checks, money orders or traveler's checks.
Lifeline Checking Account
Lifeline checking accounts were designed for people with low incomes
and are required by law in New Jersey, New York, Rhode Island,
Minnesota, Illinois, Massachusetts and Vermont. Any fees or account
requirements are set by the law for each state and aren't controlled by
the institution.
Money Market Checking Account
A money market checking account looks a lot like a savings account,
except you can still write checks from it or make withdrawals at an ATM.
Money market checking accounts were meant to hold a higher balance than
other types of checking accounts and can pay out interest. A certain
balance set by your banking institution must be held to avoid any type
of service fees. While this account acts as a combination of a checking
and savings account, it is meant for limited use and transactions.
Interest-Bearing Checking Account
An interesting-bearing account will also pay out interest on a
monthly basis, but also requires a certain deposit to open the account
and a minimum balance to avoid service fees. The opening deposit amount
and the minimum balance amount should be lower than a money market
checking account, but the interest paid tends to be at a low rate. For
most people, it is not worth maintaining an interest-bearing checking
account for such a low return, and they're better off with a basic
checking account.
Online Checking Account
Online checking accounts aren't an actual type of checking account.
They are basically the checking account you enrolled in, but with the
option of online banking. Many institutions offer free online banking
for the type of checking account you are enrolled in. With online
banking, you can pay bills, manage your account, receive paperless
account statements via email, and speak with a customer service
representative via online chat, and even deposit checks (certain
conditions and limitations apply).
