What you should know about using checking accounts
Nowadays, it seems like
nearly everyone has a checking account. It would seem, therefore, that most people are experts when it comes to checking accounts. That isn’t true; however, most people know how much money is in their checking account and not much else. The following information can help you learn about the different types of checking accounts and what options you have for opening checking accounts.
They offer more flexibility than a savings account
“A checking account differs from other bank accounts in that it often allows for numerous withdrawals and unlimited deposits, whereas savings accounts sometimes limit both,” according to Investopedia.
This flexibility is the tradeoff for having lower interest rates than savings accounts. Your checking account is the one that you will draw from when you need immediate money to pay for things like bills, groceries or online purchases.
Money can be deposited automatically, such as from your paycheck, or it can be deposited at an ATM or through a teller. Many financial institutions also offer mobile deposits, which only require taking a photograph of a check on your smartphone.
There are many options for withdrawing also, such as using a debit card or a check at a store or by using an ATM card to withdraw cash. You may also be able to pay bills online, directly from your financial institution’s website.
There are multiple types of checking accounts
Many people don’t realize that there’s more than one type of checking account, and that mistake can be costly.
“Checking accounts can include business accounts, student accounts and joint accounts along with many other types of accounts which offer similar features,” states Investopedia.
Making sure to open the correct type of account means that the account will best suit your needs. Student accounts are beneficial to people who may not meet deposit or balance minimums, while business accounts maximize the benefits that entrepreneurs need most and help business owners keep their personal and business finances separate.
Each person can have more than one
In addition to the fact that there are multiple types of checking accounts, many people don’t realize that they can have multiple of the same type of checking accounts at anytime. Having multiple checking accounts is even encouraged by some financial experts, as an easy way to budget and prevent overspending on certain expenses.
For example, many couples prefer to maintain separate accounts for each partner while also sharing a joint account for bills and other family-related expenses.
“This allows couples the flexibility to make independent financial decisions, since not every financial decision is going to involve both parties,” says certified financial planner Kristen Euretig for Fox News Business.
Other families may wish to split accounts even more, such as having one for account for rent and utilities, another for food and so forth. This makes it easy to see if there is enough room in the budget to head to a restaurant or if cooking at home is a better idea.
You can mix online and brick and mortar accounts
You may also wish to add an online checking account to your portfolio in order to earn money with a higher interest rate. This can be a profitable choice for people who find the restrictions of savings accounts difficult to adhere to, but who still want to find a great interest rate online. Using an online checking account, while maintaining your accounts at your local bank, gives you flexibility because your money is always nearby if you need to make a withdrawal or if you have questions to ask someone in person.
“It absolutely makes sense to open a second account with an online [institution] for a higher yield,” states Euretig. “In addition to higher rates, online accounts often have useful savings features that make it easy to set up automatic savings plans that draw from a traditional brick-and-mortar bank account.”
Many financial institutions offer online banking options
If you don’t wish to open an online only account because you like the option to make easier deposits and withdrawals, you may still be able to take advantage of the ease of online checking if your financial institution offers online tools. Many small community-based institutions now offer mobile tools and online banking options that rival or even exceed those offered by the national chains, so be sure to ask your bank about the options available to you.
Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.