Every question you’ve ever had about checking accounts

August 17, 2022 | Katie Levene

1. What is a checking account and how do checking accounts work?

A checking account is a financial account that makes it easy to withdraw and deposit money. It is sometimes called a transactional or spending account because you can access your money through electronic transfers, debit cards, ATMs and checks.

Checking accounts are liquid, meaning you can make multiple withdrawals and unlimited deposits. The purpose of a checking account is to provide a secure place that lets you keep and spend your money as you need it.

In general, checking accounts will have lower interest rates than savings accounts. That’s why, if you need to build up your savings, then – you guessed it – you would put your money in a high-rate savings account.

High-rate checking accounts

High-rate checking goes by a few names including high-interest checking and high-yield checking. The meaning is the same. These checking accounts provide an interest rate higher than regular checking accounts. They can even offer rates higher than many savings accounts!

Sometimes you need a large balance to get a high annual percentage yield (APY) on your checking account. How large? There’s an account out there that requires a minimum daily balance of $15,000 to qualify for a decent rate. Many experts won’t recommend checking accounts with these stipulations because that amount of money will do better in a savings account with an even higher yield.

Pick a simple high-rate checking account that gives you a great rate without the crazy criteria. Online credit unions and banks tend to offer the most competitive checking accounts.

Joint bank accounts

A joint account is a financial account that is opened by two or more individuals. Although most people think of married couples as individuals who would have a joint account, unmarried couples, close relatives and business partners are also common joint owners. For example, teen checking accounts are joint accounts where the teen and legal guardian are both on the account.

FDIC or NCUA Insurance

All your deposit accounts need to be federally insured. This includes your savings, checking and trust accounts – just to name a few.

Banks are insured by the Federal Deposit Insurance Corporation (FDIC). Credit Unions are insured by the National Credit Union Administration (NCUA). Both of these government agencies protect your money up to $250,000 if the bank or credit union closes unexpectedly.

Fun fact: No member of a federally insured credit union has ever lost one penny of insured savings.

You can find out if a credit union or bank is insured by visiting their website.

2. How to open a checking account

You need to be at least 18 years old to open a checking account. If you’re under 18, you can open a teen checking account when you turn 13 with a parent or legal guardian as a joint owner.

Opening an account is typically an easy process. If you’re switching to a different credit union or bank, you may also need the following documentation to open a checking account:

  • Valid U.S. government-issued ID (e.g. Driver’s License, Passport, State or Military ID)
  • Social Security Number (SSN) or Individual Tax Identification Number (ITIN)
  • Basic personal information (e.g. date of birth and primary address)

The credit union or bank may run a soft credit pull when you apply. This is simply to verify your identity. If you have a credit freeze, you’ll need to lift it. A soft pull will not impact your credit score.

How credit unions and banks check your banking history

When you apply for a checking account, the credit union or bank will likely pull a report to check if there are any red flags in your deposit account history.  An example is ChexSystems. Similar to how a credit report informs financial institutions of your lending history, ChexSystems provides information about your deposit account usage. A ChexSystems report will flag overdraft usage, fraudulent check deposits and unsettled balances over the last five years.

If you want to see what is on your report, you can check your report annually for free.

3. How to avoid common fees

A monthly maintenance fee, also called a monthly service fee, often occurs because of a minimum balance requirement. Accounts with these fees are easily avoidable. Many online banks and credit unions offer accounts without monthly fees.

Even if you currently don’t have an issue meeting the minimum balance to avoid a fee, it feels wrong to punish those with low balances! Switch to a bank or credit union that doesn’t require a high minimum balance to qualify for free checking.

Overdraft fees occur when you withdraw too much money from an account and your balance goes below zero. This fee typically can be avoided by monitoring your transactions very closely. Balancing your account can ensure you don’t spend more than what’s in your account, so you don’t pay overdraft fees.

Out-of-network ATM fees can get pricey quickly. Pick an account that offers a large network of ATMs and ATM fee rebates when you use an ATM outside your network. You’ll unexpectantly need cash someday. The ATM fee rebates really help when you discover you’re at a cash-only event.

4. Tips on using your checking account

Checking accounts are meant to help you move your money. You can transact with your account in a few ways:

  • Direct deposit: Never miss a paycheck again. Direct deposit is a payment transaction where your money is transferred into your checking or savings account. It is usually a recurring deposit and allows for quicker payments than physical checks. The most common direct deposit is a paycheck from your employer.
  • Wire transfers: A wire transfer is an electronic movement of money from one bank to another using the recipient’s name, bank account number and amount transferred. It’s important that all the information is correct as wire transfers can rarely be undone.
  • ATMs: You can deposit money at an ATM using a check or cash. The process to make deposits at an ATM is very simple and once you select the option to make a deposit, the machine will walk you through the steps. Your credit union or bank website will usually provide locations for deposit-taking ATMs.
  • Debit cards: A debit card lets you withdraw money from your account without the use of cash. Debit cards can be better than cash because they can allow you to track your purchases, set up recurring payments, protect you from unauthorized charges and use mobile wallets.
  • Online banking and mobile apps: The best way to keep track of your accounts is with your credit union or bank’s online banking and mobile app. You can track your balance, photo deposit checks, manage your debit card (like setting travel notifications), and transfer money.
  • Write a check: Although less common, writing an old-fashioned check is a great way to gift money or spend it.

Checking account number

You can find your checking account number in your online or mobile banking app, usually under account information. You can also find it on your monthly statements and at the bottom of a check to the right of the routing number.

On a check, the digits at the bottom, from left to right, are the bank or credit union’s routing number, then your account number, and finally the check number.

Note: the number on your debit card is different than your checking account number.

Your checking account number is unique to you and typically 10-14 digits long. The routing number is unique to your bank or credit union.

Monitoring your account

Experts say you should monitor your checking accounts twice a week and at minimum monthly. This way you can track your balance and detect fraud more easily. If you see a transaction that you don’t recognize, let your credit union or bank know with a phone call or message in online banking and they will investigate the transaction.


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Katie Levene is a marketer fascinated with finance. Whether the topic is about the psychology of money, investment strategies or simply how to spend better, Katie enjoys diving in and sharing all the details with family, friends and Money Mentor readers. Money management needs to be simplified and Katie hopes she accomplishes that for our readers. The saying goes, "Knowledge is Power", and she hopes you feel empowered after reading Money Mentor.

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