Dmitriy Fomichenko, President, Sense Financial
A checking account is a bank account held at a financial institution that allows deposit and withdrawal of money. These accounts are beneficial because of the liquidity they offer. You can withdraw funds using checks, automated teller machines (using a bank-issued debit/credit card), and electronic debits.
Kathleen Cole, Member
A checking account is a basic deposit account held with a bank or credit union. Features like direct deposit allow employers to directly transfer paychecks into a checking account, and debit cards allow easy access to funds wherever Visa, Mastercard or American Express is accepted.
Key Things to Know About Checking Accounts
- Low interest rates. If you’re looking to earn interest on your money, don’t leave it in a checking account. Their interest rates have historically averaged only 0.03% - 0.14% APY, and some earn no interest at all.
- Fees galore. Checking accounts can charge all kinds of fees, including a monthly maintenance fee that many banks will waive if the account’s balance is kept above a certain level or if it receives regular direct deposits, such as paychecks. Read your account agreement’s fine print carefully to avoid maintenance fees, overdraft fees, and other unpleasant charges.
- Funds held in checking accounts are easy to access. You can make purchases and withdraw cash with a debit card, write checks, or even instantly transfer money to a friend via a mobile banking app, making this kind of account great for everyday use. However, if you’re trying to save money, having your funds accessible at all times could be a downside.
- Rewards? If you’re hoping to earn rewards on purchases you make with a debit card, you’ll likely be disappointed. It’s rare to find a checking account that offers this feature. Only about 5% of personal branch checking accounts offer a rewards program, according to WalletHub’s latest Banking Landscape Report.
You can use WalletHub’s checking account comparison tool to find the right checking account offer for you.
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