Checking Account Information for Consumers

A checking account is a deposit account at an institution of banking where funds are deposited or withdrawn on demand by the holder against an available principal. The individual that has the account is the holder. The holder has the ability to withdraw these funds by writing checks, and they can also withdraw these funds or deposit them using an ATM card or debit card. A checking account is also referred to as a demand account and it is activity is subject to the availability of funds and the terms and conditions of the account between the provider and the holder. Most individuals know what a checking account is and how it operates, however, there are so many types of accounts that are constantly emerging that it boggles the mind. At the very basic form, it is a federal insured institution where you put money in and you pull money out.

When opening a new checking account don’t be distracted by the giveaways. Banks will use all kinds of tactic to get your business. The more money that you plan to deposit will often times way in on the amount of the freebie received. A bank account is a very important factor in your financial future and it is not to be taken lightly. Before opening an account, you need to make yourself familiar with all of the different options and only after you have educated yourself on them should you decide which one is right for you. The single most important thing that you should know is what fees are associated with your choice of account and you need to have the time to read through all of the fine print in the contract.

Transactional Account-put money in draw money out. It is a deposit account for the purpose of storing funds and accessing fees. This account is obtained for accessing funds and not saving them. There is no interest accrued on these types of accounts. A transactional account can be a basic checking account or a free checking account. Basic checking accounts may require a direct deposit and some are subject to a monthly maintenance fee. Some basic checking accounts limit the amount of check that you can write per month and charge if you go over this amount. Free checking accounts usually requires no minimum balance and has no restrictions on the amount of transactions. Fees can be incurred with insufficient fund occurrences. There are also personal accounts enjoyed by one person and joint accounts that are shared by two people.

Express Accounts - With this type of an account transactions are usually handled by ATM, telephone or online banking. This are basic accounts that has a low minimum balance and unlimited check writing, however, there are many higher fees connected with these type of accounts when using the teller for transactions.

Second Chance Checking Accounts - These accounts are associated with those people that have endured a financial hardship and obtained bad credit for whatever reason. Higher fees and daily minimum balances are usually required to secure this type of an account.

Lifeline Checking Accounts - These type of account are for low-income people and in some states they are required by law. The terms of these account are set by laws and not by banks and usually have low fees associated with these accounts.

Student Checking Accounts - These types of account are offered to high school and college students and they usually have special perks attached to the account.

Senior Checking Accounts - These are account that are offered to those that are over 55 and they also have specially perks that have been thrown in to the terms.

Interest Bearing Checking Accounts - These type of account require a minimum deposit to open and a high monthly balance to maintain in order to not incur fees. This type of account will pay interest to the holder based upon the maintained funds and terms.

Money Market Checking Accounts - This an account with a high rate of interest attached to it. This types of account require a high minimum deposit and a high monthly balance must be maintained. This is an account for those who do not write many checks per month. Usually there is a transaction limit and federal regulations involved with this account, and sometimes these is a notice that is required prior to accessing funds.

Now and Super Now Accounts - These are interest bearing account that are usually tied to a certain amount of maintained monthly balance with the amount of interest determined by the terms. The rewards for these accounts are better than a simple interest bearing checking account, but not as high as a Money Market account.

Now that you have a pretty decent understanding of the different types of fees, you should be able to make a more informed choice of which type of checking account is right for you. Always make sure that you know the amount of fees that are involved with each type of account. Due to the breakdown in the financial market over the last few years federal regulations have severely limited the banks ability to charge outrageous fees for overdrafts, late fees on credit cards, and swipe fees on debit cards. Because of this new regulations banks are finding new ways to recoup these funds. When choosing your bank and type of account be sure to shop around. Some banks have increase their monthly maintenance fees. Others have started charging for check imagining fees. Many will charge for using ATM’s other than their own. A fee here and a fee there can quickly dwindle the amount of funds in your account and they can often create overdrafts. Furthermore, make sure that you understand the order in which money may come out of your account. For example, if you wrote a series of small checks and then had an emergency a day later for whatever reason, and you wrote a check that you are hoping that you can catch before it makes it to the bank. (Technically, in a perfect world you should never do this, but things happen). Assuming that you didn’t make it in time, you would expect a possible bounced check and an overdraft charge. Often times banks will take the larger amount out first causing multiple smaller checks to bounce creating many overdraft fees. This can have a devastating chain reaction.

Just remember that it is all smiles and frills when you go to open these accounts. These people are not your friends, they are part of a business. There job is to gain your money and hope for a mutual great outcome for the two of you.