Checking Accounts: Everything You Need to Know

If you need a bank account for everyday expenses like bills, groceries, or other purchases, you’ll want to open a checking account.

If you don’t have, no longer have, or are considering a new checking account, you’re not alone. About 7.1 million US households do not have a bank account, including checking Federal Deposit Insurance Corporation (FDIC) approx.

Most banks and credit unions allow you to open a personal checking account online without visiting a physical bank branch.

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What is a checking account?

A checking account is an account you open at a bank or credit union. You can make and receive deposits, withdraw funds, make purchases and pay bills and expenses. You can use a checking account by swiping a debit card, writing a check, withdrawing cash from an ATM, using an app, or making an online transaction.

Unlike a savings account Whereas the goal is to build cash for long-term goals or emergencies, checking accounts are typically used for short-term or immediate everyday expenses, such as bills, groceries, and rent.

What is required to open a checking account?

The bank or credit union will want to verify your name, birthday, address and official identification number. These numbers may include Social Security, Individual Taxpayer Identification Number (ITIN), passport or other ID issued by the United States or your state government.

Some banks and credit unions will accept passports from other countries as a form of identification. Most require at least one form of government identification with a photo.

Generally, banks require a second form of identification. This might include your Social Security card, a bill with your name on it, or a birth certificate. Before you open a checking account, carefully check the account features for fees, minimum balances and other features.

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How much do you need to open a checking account?

It varies depending on the features of the account. Basic checking accounts typically require a $25 to $100 deposit to start.

Some checking accounts with interest-like features require much higher minimum deposits that can start at $10,000.

Is there a downside to opening a checking account?

Having a checking account allows you to participate in the financial system more easily than without one.

Some damage may occur. Study your account features, including overdraft fees, minimum balance requirements and ATM usage requirements. It is important to maintain a positive balance in your checking account to avoid fees.

What are overdraft fees?

Banks charge overdraft fees when you spend more than you have in your checking account—called “insufficient funds.” If this happens, your bank may decline the transaction. This means you’ll still pay the original payment and a possible overdraft fee of $35 per transaction (the fee amount depends on your institution).

Some banks offer overdraft “protection”. Under federal law, you must pay “Permission to opt in,“For this feature before banks charge fees for it.

In recent years, some banks Some banks have waived overdraft fees After the Consumer Financial Protection Bureau (CFPB) began testing the practice.

Reasons to open a checking account

With a checking account, you can shop, pay bills, withdraw cash at an ATM, deposit and access your money more easily than without a checking account. You can make these transactions through an app, a debit card, online or by writing a check.

Banks usually issue a debit card tied directly to your checking account that you can use at ATMs. Debit cards look like credit cards but withdraw money from your checking account.

Does opening a checking account affect credit?

Opening a checking account does not directly affect your credit rating because accounts are not reported to the three major credit rating companies.

But banks can close your account if you write bad checks or make too many transactions that aren’t in your account. This may hurt your ability to open a new account elsewhere.

What are the different types of checking accounts?

There are many types of consumer checking accounts. Confirm the bank or credit union you choose insured By FDIC to keep your money safe. You can search for FDIC-insured banks and credit unions to suit your needs. Many make it look easy Open your account online.

Here are a few types of checking accounts you might consider:

• Standard (or regular) checking account. This type of account gives you all the basics. You can use ATMs to make deposits and withdrawals, pay bills online, or buy things by writing checks and using a debit card. Although there is often a monthly fee, some banks will waive it if you ask or if you carry a minimum balance. These accounts usually do not pay interest.
• Premium Checking Account. Premium accounts offer special benefits in exchange for maintaining a minimum balance as high as $10,000 for pooled funds at a bank or credit union. In exchange, the bank waives some fees and offers perks like free checks, financial advice and lower mortgage rates.
• Calculation of interest: These accounts often require a minimum balance to earn interest on your deposits. Make sure the interest rate is higher than the fees or interest you can earn Other types of accounts.
• Free Checking Account: A free checking account means the bank doesn’t charge a monthly fee or fees for a certain number of transactions. These types of accounts still charge other fees, though, so check the requirements carefully.
• Student Checking Account: Many banks offer free checking accounts for students alone or as part of a banking package. Some waive overdraft fees and don’t require direct deposit. Such accounts may require a co-signer if the student is under 18 years of age.

Have more questions? Contact Chime to see which type of checking account would be best for you, or review the table below to evaluate some other checking account options.