What is a Checking Account? – The Basics

The checking account is essential for pretty much everything personal finance. At some point, everyone will open their very first checking account—you have to start somewhere.

What is a Checking Account?

A checking account is a fundamental tool in personal finance designed for everyday transactions. It generally is the first place you store money, and can easily deposit or withdraw funds. If you’re thinking about getting your first job, you’ll need a checking account to set up direct deposit so you can get paid.

Your checking account can also be linked to things like Venmo so you can send/receive payments from friends. I think of it as a virtual wallet, although you can still write checks (but we’re Gen Z though, we don’t really do that).

Opening a Checking Account

To open a checking account, visit your local bank or credit union. You can always use an online bank, but I’ve always found it most helpful to have a checking account at the biggest local bank near you so you can easily access ATMs (more on that soon).

You’ll need identification, proof of address, and, if you’re a student, check if there are specialized accounts tailored to your needs. Checking accounts are free to open typically, so no worries there.

Understanding Account Features

Your checking account comes with various features, including a debit card for purchases and ATM withdrawals, checks for transactions, and online banking for convenient account management.

The debit card is used the same way as cash, and any time you use it the money you spend comes directly from your checking account instantly. If you go with a big local bank with lots of ATMs around, your debit card will allow you to easily deposit and withdraw cash from your account through the use of ATMs.

Online banking is truly amazing when you think about how our parents used to (and many still do) balance their checkbooks because they couldn’t see their balance instantly by going online. Most checking accounts have apps that you can easily monitor how much money you have. Oh, and if someone does give you a check, you can usually take a picture of it through your app to deposit it straight to your checking account!

Balancing and Monitoring Your Account

You should regularly monitor your account to ensure accuracy and prevent overdrafts. Set up account alerts and utilize online banking tools such as balance threshold alerts to stay informed about your balance and transactions.

Some banks will give you the option to let you overdraft for a fee (meaning you tried to spend more than you have in your account). I usually just opt out of this since I know what I have, and if I would overdraft, my card would just decline.

Fees and Charges

I know I said most accounts don’t have fees, but you should be aware of potential fees, such as monthly maintenance fees or overdraft charges. There’s no reason to be paying for your checking account, as it is quite literally the most common bank account and is offered at basically every bank.

If there are mandatory fees, it’s time to look elsewhere. So do your homework on this before deciding on a bank. Thank me later.

Building Financial Habits

Use your checking account as a tool to build healthy financial habits. Create a budget, track your spending, and set financial goals that your checking account can support. This is further down the line after you get all set up and comfortable with your account and all of it’s features, but it’s important to keep in mind.

Many checking account apps have features that can help you budget, save, and track your spending. These are so important to consider and it’s great to build a good foundation for these personal finance fundamentals.

Conclusion

Understanding the basics of a checking account is a pivotal step toward financial independence. As you navigate your personal finance journey, remember that your checking account is more than just a place to store money—it’s a tool for managing and achieving your financial goals.

It’s hard for me to really recommend a specific bank, but as I mentioned, do some digging on the banks in your area, maybe ask around. You want a big bank that has lots of ATMs to access, and a well-made app so you can actively manage your finances.

Curious about checking accounts or have tips to share? Drop your thoughts or questions in the comments below. Let’s create a supportive community where financial knowledge thrives!

– Zack

30 thoughts on “What is a Checking Account? – The Basics”

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