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What is a Checking Account?

A checking account is a deposit account that you can open at a traditional bank location, online bank, or credit union. A checking account is safe to keep your money in an account used for daily cash deposits and withdrawals. You can access your money with a debit card, online transfers, or writing checks.

How Do Checking Accounts Work? 

Checking accounts are great for daily money transactions because they have very few limitations in accessing your funds. Your checking account allows you to make purchases and payments as often as needed as long as you have enough money in your account to cover them. However, some accounts may have a daily ATM withdrawal limit, and your debit card may limit the amount you can debit from your account on a given day.

Your bank will issue you checks when you open the account. When you pay a bill or debt owed to a family member using a check, the business person will deposit it into their checking account. Their bank processes the check, and the money is withdrawn from your account and credited to theirs. There are other ways to access the funds in your checking account besides a check which includes the following:

  • Debit cards – Debit cards bearing a Visa or Mastercard logo are used to make purchases in-store, online and make deposits or withdrawals at ATMs.
  • ATM cards – ATM cards are used to make deposits or withdrawals at ATMs, but you can’t use them for purchases.
  • ACH transfers – ACH or electronic transfers allow you to schedule deposits or withdrawals, including bill payments, to and from your checking account online.
  • Wire transfers – Wire transfers can deposit or withdraw large sums of money to other bank accounts in the U.S. and foreign countries.

Checking accounts do not pay much interest if they pay any, on the money in your account. This is because of the accessibility of your money in that account. Some banks may charge a monthly service fee on your checking account but may waive them if you meet specific requirements like maintaining your minimum balance or using direct deposits to avoid service fees.

Checking Account Features

There are features that every checking account offers, so when you are deciding on which account to sign up for, it is best to review the features and any associated fees. 

Direct Deposit 

Direct deposit allows your employer to electronically deposit your paycheck into your bank account, making the funds immediately available. When your paycheck is deposited, many banks will make the funds available up to 3 days earlier than your expected payment date. Banks also benefit from this feature, as it gives them a steady flow of income to lend to customers. Because of this, many banks will provide free checking (i.e., no minimum balance or monthly maintenance fees) if you set up a direct deposit for your account.

Electronic Funds Transfer

With an electronic funds transfer (EFT), also known as a wire transfer, it’s possible to have money directly transferred into your account without waiting for a check to come in the mail. Most banks no longer charge to make an EFT.


ATMs make it convenient to access cash from your checking account or savings after hours, but it’s essential to be aware of fees associated with their use. While you’re typically clear when you use one of your own bank’s ATMs, using an ATM from another bank could result in surcharges from the bank that owns the ATM and your bank. However, surcharge-free ATMs are becoming increasingly prevalent.

Cashless Banking

The debit card has become a staple for anyone who uses a checking account. It provides the ease of use and portability of a major credit card without the burden of high-interest credit card bills. Many banks offer zero-liability fraud protection for debit cards to help protect against identity theft if a card is lost or stolen.

What is a checking account used for?

Checking accounts are used to store your money in a central location that is easily accessible through checks, debits cards, and ATMs. Your employer can directly deposit your paychecks in the account. You can link it to payment apps like Venmo and PayPal, and you can pay bills from it and more. Checking accounts are a building block to managing your money and make all kinds of financial tasks easier.

Types of Checking Accounts

There are various types of checking accounts available that each offer their own features. It is important to decide what features are important and what you will be using your checking account for. Below are some of the common types of checking accounts available.

  • Regular (primary) checking accounts – These typically offer checks, a debit or ATM card, and online bill pay options. 
  • Premium checking accounts – This account typically offers perks that you’d otherwise have to pay for. This type of account may provide a free safe deposit box, personal checks, official checks, free money orders, and fees waived on some or all out-of-network ATMs. 
  • Student checking accounts – These are usually for students aged 18-23. Student checking accounts might not have maintenance fees for those who qualify. They may also offer overdraft forgiveness, ATM fee reimbursement, free checks, or other perks. These accounts can be an excellent way for students to begin managing their money.
  • Senior checking accounts – These accounts are typically for people aged 55 or 60 and offer perks for qualifying customers, such as free checks.
  • Interest-bearing accounts – These checking accounts help you earn interest. Some of these may have specific requirements to reach a certain APY, such as having a minimum direct deposit or a minimum number of debit card transactions.
  • Business checking accounts – Business checking accounts may charge customers extra for transactions surpassing a specific number. If your company has a lot of cash deposits, consider these charges carefully when comparing these accounts.
  • Checkless checking – These accounts don’t offer checks, so you’ll need to rely on a debit card to make transactions. This type of account might not have overdraft fees. 
  • Rewards checking accounts – Earning points or cashback is possible with this checking account when purchasing your debit card. These accounts come with different features or limits on certain features, such as minimum deposit amounts, number of transaction fees, ATM fees, and overdraft protection.

Checking vs. savings accounts

A checking account is used as a safe place that stores your money and allows you to have easy access to your funds as you need them. A Savings account is opened with the purpose of storing money in a safe place and not accessing the funds on a regular basis so it has the chance to grow and gain interest. Many savings accounts have restrictions on how many times a month you can withdraw funds from the account. This is done to encourage savings account holders to leave the money in for extended time while a checking account is designed to make the funds easy to access and readily available. 

Checking AccountSavings Account
Primary useSpendingSaving
InterestSometimes, usually minimalYes, interest rates vary by bank
Common FeesMonthly maintenance fee, overdraft fee, out-of-network ATM feesMonthly maintenance fee, minimum balance charge
Minimum BalanceVaries by bankVaries by bank
Limits on transfersNoneSix each statement cycle

Standard fees associated with checking accounts

Checking account fees are amounts banks charge customers for certain transactions or failing to maintain a specified balance. Checking account fees can add up, but most are also avoidable.

  • ATM Fees – Using an ATM outside your bank’s network could cost you both a surcharge from the owner of the ATM and a fee from your financial institution.
  • Monthly service fees, or maintenance fees, are billed monthly. Generally, keeping a certain balance in your account can help you avoid these fees.
  • Overdraft fees – Overdraft fees, also known as non-sufficient funds (NSF) fees, can be some of the most expensive bank fees. Federal regulations require banks to let customers opt-out of overdrafts on debit cards. For many people, having their debit card declined when they don’t have the money to cover purchases is preferable to incurring overdraft fees.

How to Avoid Overdraft Fees

Many banks offer overdraft protection for checking account-holders. This feature is like a line of credit that kicks in when a purchase is made for an amount that the account cannot cover. Overdraft protection adds the funds to the account, so the purchase is not denied, avoiding a non-sufficient funds (NSF) fee. 

If your bank offers an app, this can help you avoid overdraft fees by setting the app to alert you if your account balance is low. 

How to choose a checking account

Here are some features to consider before opening a new checking account.

  • Look for accounts that offer low or no fees. Some accounts require a specific minimum balance to open the account. So look for accounts that require no minimum balance or maintenance fees.
  • Review the availability of their ATM network and any fees they charge if you use an out-of-network ATM. Some accounts may offer reimbursement on fees charged when you use an out-of-network atm.
  • Accounts may offer a bonus when opening an account and setting up direct deposits. Some banks may offer up to $400 after 90 days of account use and direct deposits. Keep an eye out for sign-up bonuses. You shouldn’t pick an account based solely on a promotion, but it could help you decide between two otherwise comparable options.
  • Does the account offer online banking, and can the app meet your needs and make banking more convenient. 

How to open a checking account

After reviewing account features and deciding which account best meets your needs, there will be some information you will need to gather to open the checking account. 

  1. Gather the documents the bank requires (such as Driver’s license or state I.D.), proof of address (current utility bill, lease agreement, or mortgage statement)
  2. Have your social security number on hand, and if you are not a U.S. citizen, have your Taxpayer Identification Number and proof of your identity to open a checking account.
  3. Complete any application required by the bank. If you are applying for an account online, you will do this process and upload the documents for the bank to verify. If you are applying at a local branch, you will apply at the branch, and the bank will verify the documents then. 


Does opening a checking account affect my credit score?

It isn’t typical for a new checking account to impact your credit score, but there are some exceptions. When you apply to open a checking account, your bank may check your credit score. Depending on what information your bank wants to review will impact whether they make a soft or hard inquiry on your credit. 

Depending on what type of checking account and what features are available will influence if the bank makes a hard or soft credit inquiry. A hard inquiry will affect your credit score, while a soft pull has no adverse effect on your score.

Is a checking account a debit card?

No. Checking accounts are a place to store money for everyday transactions separately from your savings. Debit cards are tools to access the funds in linked accounts through ATM withdrawals and point-of-sale transactions. You technically can’t get a debit card without a checking account (and vice versa) except when you buy a prepaid debit card or a digital bank account that doesn’t offer a physical debit card.

Can I open a checking account with no money?

Yes, some checking accounts allow you to open the account with no money and no minimum balance. Not all checking accounts allow this, so review the accounts requirements with the bank. Some accounts require a minimum deposit when you open the account, while others allow $0 to start the account.

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