What is a checking account?

Everything you need to know about checking accounts

A checking account is a handy bank account for everyday expenses. You can make deposits, pay bills, and access cash with a debit card or ATM card.  

Since it allows for unlimited deposits, it’s often the most logical account to deposit your paychecks into (usually by direct deposit). You can also use it to make payments in a number of ways: using a debit card, linking it to a payment app, or even writing a check. It

can be more convenient than using money orders or prepaid debit cards, so it’s a good idea to get a checking account when you start making money and/or when you start to have lots of bills to pay!

How do I open a checking account? 

Opening a checking account is similar to opening a savings account. You’ll first want to compare a few banking services account types. Take a look at our analysis on the best checking accounts for college graduates, best checking accounts for people under 30, best checking accounts for low balances, and best checking accounts with $0 overdraft fees to get you started.

To apply, you’ll need:

• Your Social Security Number (you probably don’t need the card, just the number, which you might already have memorized). 

• A government-issued ID, such as a driver’s license or a passport (again, you may just need the information from this ID, especially if you’re applying for the account online).

• Other information that you’ll need might include your date of birth, email address, and physical address. 

• Most accounts let you apply online, though in some cases you’ll need to apply in person. Then, once you’re set up, download the app and you’ll be ready to go!

Why you need a checking account

To pay for things 

The primary reason you’ll want a checking account is to pay for things. You can easily access the money in your checking account in a number of ways.

You can, of course, write a check (people do still take checks, as surprising as that might sound). You can also access it using a debit card or link various electronic and app-based accounts to your checking account (see below for more information on this).

This is a lot easier than relying on cash and money orders and a lot cheaper too!

To have your paychecks direct deposited into your checking account

It’s also good for putting money into as well. These days, we use the word “paycheck” pretty loosely (the same way we use the phrase “hang up the phone” when we’re really just pressing the “end call button.”).

Many employers don’t pay you with an actual check (or cash, even if you work in a cash-heavy business like waiting tables), but rather set up a direct deposit program for you. You may have other sources of funds above and beyond your regular paycheck, and that money can go into your checking account, too.

(Don’t worry. You can transfer money from your checking account to your savings account so you can build up your savings each month!). Having one place where all your incoming money ends up is convenient, to say the least. 

What fees do banks usually charge?

The Federal Deposit Insurance Commission (FDIC) lists up to EIGHT different fees that a bank may charge you just for keeping your money in your checking account!

From monthly service fees to ATM charges to overdraft fees to a phone inquiry fee, the bank can hit you from multiple angles and suck away plenty of your hard-earned dollars with their fees (some hidden, some out in the open). For some checking accounts, you can be charged for seemingly everything.

Here are nine common fees that you might encounter when you’re looking at different checking accounts:

1. Monthly service fee: Just like it sounds. Some banks charge you a set amount each month for the privilege of using your account! This is also known as a maintenance fee and was once the most common fee associated with checking accounts, but thankfully, there are more and more free checking accounts out there.
2. ATM-usage fee: Your bank may charge you a fee every time you use an out-of-network ATM to make a transaction.
3. Overdraft fee: If you try to make a purchase and you don’t have enough money in your account to cover it, your bank will let the purchase go through, dropping your account into a negative balance and charging you a fee on top of that. Not all accounts do this, and, if you think you’re in danger of overdrafting from time to time, we can help you find a checking account that doesn’t charge you overdraft fees. These are also known as NSF (non-sufficient funds) fees.
4. Returned-deposit fee: If you try to deposit a check in your account and that check bounces, your bank will charge you a fee.
5. Per-check fee: If you’re in the habit of writing a lot of checks (though these days, that seems unlikely), you want to be wary of this. Your bank will ding you with a surcharge every time you write a check (though some checking accounts allow for a few free checks a month before this fee kicks in).
6. Check-printing fee: This is how much you pay to actually get your checks from the bank. You can get plain or fancy ones (those Avengers checks are pretty sweet, especially the ones with Cap and Iron Man), though the fancy ones usually cost more. The bank typically deducts the cost of the checks right from your account.
7. Stop-payment fee: Sometimes, you need to stop a check in its tracks. Maybe you lost a check from your checkbook, or maybe you changed your mind after you wrote out a check and gave it to someone. If you need to stop payment on a check, your bank will charge you a fee.
8. Phone-inquiry fee: Now that you have the ability to check your account balance online or through an app, banks are trying to push customers to self-service through these tools. For that reason, some checking accounts charge you a fee if you call the bank to find out if a check has cleared. If you’re comfortable using online and mobile banking tools, you may not have to worry about this fee.
9. Debit-card replacement fee. That’s right, if you lose your card or forget about it in your favorite jeans and it takes a wash, they charge you to mail you a new one.  Many banks don’t charge, but some it can be as much as $35!

As you can see, these fees can really start to add up, especially if your account has many of them!

How much do most banks charge?

Fees for the above can vary quite a bit depending on the bank, but, generally, you’re going to be looking at:

• $35 overdraft fees

• $2 per ATM transaction fee

• $10-$12 per month maintenance fee

• $5-$25 in various other types of fees

All of those fees can really add up. You might think you have a few hundred dollars left in your account only to realize your actual balance is a lot lower because of all these fees. That could be quite a shock to the system!

What to look for in a checking account

• Connect to apps: Get a checking account with a great mobile app. Look for one that lets you check your balance, set up alerts, transfer funds to and from the account, and deposit checks remotely. You’ll also want to connect your checking account to mobile payment apps like Venmo, which allow you to pay (and get paid by!) your friends and family.
• Debit card: This may end up being the most common way you use your checking account. Your debit card will take money out of your checking account (electronically, of course) and provide it to the person or business you’re trying to pay, either in person or online. It works like a credit card, but it lets you pay with your own money rather than using a line of credit. Whether you’re buying something in a big box store, paying for a meal at a restaurant, or ordering something from your favorite website, your debit card will serve you well, so make sure you get a checking account that provides you with a debit card!
• ATM withdrawals: There are times when you will want cash, and you can withdraw money from your checking account via an ATM (automated teller machine), probably using the same debit card described above. The money comes right out of your account and into your hand, and you can use it to buy things the old-fashioned way! Check to see if there are lots of ATMs in your area, and find out if you get charged a fee if you use an out-of-network ATM.
• Write checks: This is where this type of account gets its name, even though fewer and fewer checks are written each year. Some people don’t write any, but there may be times when you will need to write a check. Maybe your landlord requires it. Maybe you need to pay your neighbor for something and she just doesn’t want to use PayPal or Venmo. At times like these, you’ll go old school and write that check!

What to do if you don’t have a checking account

If you don’t have a checking account, then you’re likely to use alternative methods to pay your bills.

• Using cash has become increasingly difficult as many businesses are moving to cashless transactions — especially during the pandemic.

• Another option is to pay through a bill counter at your grocery store or Walmart.

• Or you can use a money order. These can be inconvenient, as you need to find a place that will make one for you and each one costs a surcharge.

• Prepaid debit cards are convenient, but they have hassles as well. Sure, you can often refill them, but that process can be a pain.  

Check out a checking account

A checking account is a useful tool that can make financial transactions a lot easier. According to The Pew Charitable Trust, nine out of 10 Americans have a checking account.

It can help you manage the money you’ve got coming in and allows you to easily pay for things.

Sure, you don’t make money like you would with a savings account that earns you interest, but the convenience of it outweighs the drawbacks. In fact, pairing a checking and a savings account together sets you up with the initial financial tools you need to take on the world!