Many people will open their first checking account with the help of a guardian or parents, while adults may start one with their first paycheck or when changing banks. Once opened, you may not give it a second thought, but checking accounts play a vital role in healthy money management and making life easier.
If you haven’t had a checking account before or are wondering if it’s still a good idea to keep one open, there are many advantages to opening a checking account.
What is a Checking Account?
Checking accounts are a type of bank account that can be opened at a traditional brick-and-mortar bank, credit union, or through an online banking company. They are primarily for keeping your money safe while still having access to it, including making deposits and withdrawals at will.
Unlike a savings account, in which the money is usually saved for emergencies or financial goals, the money in a checking account is meant for everyday expenses, from food and entertainment to household bills.
You can make almost any type of deposit to a checking account, including direct deposits from your work, ATM deposits, mobile check deposits, and many others. With a checking account, you can write checks, use a debit card, or pull cash from the ATM to pay for items or services. The money will come directly from your checking account when you use a debit card or write a check.
Before you pay for something, though, be sure that your checking account has enough money in it; some banks may charge a fee if you do not have enough funds to cover the expense.
Types of Checking Accounts
Although many people think there is just one type of checking account, there are several different types available. Which one you decide to go with will depend on what is offered at your bank and what you need from a checking account, as some offer more advantages than others.
Traditional checking accounts
Traditional checking accounts offer basic options such as checks, debit cards, and online bill pay options. To open a new checking account, you will need a minimum deposit, usually between $25 and $100. Some banks may also have a minimum balance fee, which means you have to keep a certain amount of money in the checking account; otherwise, you will have to pay a fee. However, many banks may waive this fee if this is your first time opening an account with them.
Traditional checking accounts are best for those who just want to keep their money in a safe place while being able to access it without any extras.
Student and senior checking accounts
If you are a student between 13-24 years old, you may be eligible for a student checking account, which offers many perks such as overdraft forgiveness, free checks, and ATM fee reimbursement.
Student checking accounts are a great way to get introduced to checking accounts, as they have some extra benefits that a traditional account typically does not offer. However, you must qualify as a student in order to open one.
Many banks also offer senior checking accounts for people over 60 years of age. They typically have similar benefits to a student checking account and can be helpful for those living on fixed incomes.
Interest-bearing checking account
Interest checking accounts are similar to traditional checking accounts, except that they can earn interest on your money. In order to open an interest-bearing checking account, you may be required to pay a higher minimum deposit and maintain a higher minimum balance, but it will depend on the financial institution.
Similar to a traditional savings account, the interest you earn on a checking account won’t necessarily be high, but it will still allow you to earn money on what would otherwise be just parked in an account.
Rewards checking account
More and more banks are offering checking accounts that allow you to earn rewards when you spend money, similar to credit card rewards. An example of a reward that banks may offer is earning a certain percentage of cash back on your purchases or paying your bills on time.
Before settling on a rewards checking account, make sure to do your research and shop around a little. Some banks offer better rewards than others, while others may make it easier to redeem the rewards.
Advantages of Checking Accounts
No matter which type of checking account appeals to you, there are many advantages to opening one, from direct deposit of your paycheck to easy access of your money.
Easy management of your money
One of the main advantages, and often the main reason, to open a checking account is the easy management of your money. A checking account allows you to put your money in a safe and secure location that you can access at any time. Whether you need to pay for groceries or write a check to an electric company, a checking account allows you to do just that with ease.
Debit cards make paying for purchases easy and convenient, instead of having to carry cash everywhere with you; just make sure you have enough funds in your account.
Aside from being able to pay for items conveniently, you can manage the money in your checking account online or with a mobile app, so you will always know how much you have and can plan for the future.
Direct deposit and transfers
Having a checking account means you are able to have your paychecks or other sources of income directly deposited into your account. You won’t have to wait around for a paper check that can easily be lost.
Instead, the money will appear automatically and can be used as soon as it hits your account. Many checking accounts now also offer options to transfer money for free between your accounts at the same financial institution or even to other people. This means no more haggling over splitting the check on the spot; instead, you can send money to your friends directly from your checking account.
Interest and rewards
Depending on your bank and checking account type, you have the potential to earn rewards or even interest on the money and purchases within your checking account.
This means you can earn a little extra on money that just sits in the account or even rewards, such as cash-back on purchases similar to credit cards.
FDIC Insurance
Along with easy management, putting your money in a checking account from a qualified financial institution ensures that your money is safe and protected. Most checking accounts are insured by the FDIC, typically up to $250,000 per depositor. If something happens to the bank, then your money, up to the limit set by the FDIC, will be safe, much better than keeping your money under your mattress.
Disadvantages of a Checking Account
Having a checking account brings many advantages, from tracking spending to having accessibility to your money at any time.
However, there are a few small drawbacks to keep in mind when looking for the right type of checking account.
- Fees – As with all types of accounts, there are usually fees on checking accounts, such as monthly fees or overdraft fees. These can be avoided with minimum balances and the right type of account. Some banks may offer introductory specials that include free checking accounts.
- Balance Minimums – Along with fees, many banks may require a minimum balance to keep the checking account. If you go below the minimum balance, they may charge a fee. However, like with fees, there are banks and checking accounts available that do not require a minimum balance.
Enjoy the Advantages of a Checking Account
Whether you are a student getting your first paycheck and need a place to keep your money safe or a person wanting to improve their financial management, a checking account offers many advantages for everyone. With easy access to your money, direct deposit, and even rewards, in some cases, checking accounts allow you to keep your money safe and at hand.
At SouthEast Bank, we offer several different types of checking accounts to fit your needs and financial goals, including Premium Interest Checking and Bonus Rate Checking, which help you do more with your money. To learn more about the advantages of opening a checking account with SouthEast Bank, contact one of our knowledgeable and friendly associates to get started.
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