How to Open a Checking Account in 2020?

What is a checking account?

The time comes in nearly every adult’s life for them to open their own account with their bank. It can be confusing though, especially for someone with no financial background. There are lots of different areas to consider when opening any type of account. It can be hard to navigate personal finances, especially checking accounts. They come with their own challenges (and benefits). Sometimes creating a checking account can feel like a Herculean task. Hopefully, this article will offer you some clarity! You can become an expert in checking accounts before you even step foot in the bank. You will be able to understand checking account related financial jargon and choose a bank that will fit your needs.

Checking account definition

Basically, a checking account is a bank account that gives you constant, easy access to your money. Checking accounts are also called transactional accounts and demand accounts. They allow you to make frequents withdrawals and deposits. Having a checking account will also help to keep your money safe. 

What can I use a checking account for?

You can use a checking account for a multitude of things. The (arguably) most important feature of a checking account is the ability to connect it to your debit card. This means that you can buy groceries with your debit card, and the money will automatically be deducted from the checking account. When you write a check, the money will come out of your checking account. The majority of checking accounts allow for an unlimited number of deposits and withdrawals. You can deposit money at the bank or at an ATM. If your bank offers it, a direct deposit could be another option. If you link your account to Venmo or Paypal, you will be able to get money from these apps. You can take money out of the account every day if you want! These accounts are designed for regular bills and everyday transactions, meaning they don’t garner much interest. When you open a checking account, you will also get an ATM card, personal checks, plus a debit card. Using a checking account to pay for things helps you to track your money and budget more efficiently.

How do I find the checking account that is right for me?

While the fundamentals of most checking accounts are pretty similar, they are not created equal. You should always do your research and find a bank with a system that fits your needs. If you open your account with a large bank that has a lot of brick and mortar locations, you should know that you are likely paying for the company’s rent and employees. You would likely end up paying in the form of additional taxes and fees. Sometimes, it is better to open your account with an online bank. You could save some extra money with this method. Look for institutions that offer high interest rates and minimal fees.

However, it isn’t all black and white. If you are someone whose employer pays them with a physical, paper check, you might be better off with a physical bank you can visit so you can deposit your checks. Be sure to check on a bank’s ATM fees, account minimum fees, and overdraft fees. If you are someone that needs ATM’s or physical banks nearby, ensure the bank you are looking for offers these services. Take your time to find a bank that fits your needs. Checking account offers vary, just like your checking account needs do!

How does a checking account differ from a savings account?

While these two types of accounts seem similar, they have very different functions. Savings accounts accumulate interest over time. With a savings account, you cannot take money out quite as frequently. Most savings accounts allow you to withdraw money only 3-6 times per month. Savings accounts often have a higher minimum balance as well. On the other hand, checking accounts rarely offer any interest. If they do, it is usually a negligible amount. Most banks allow you to deposit and withdrawal money any time you want if you have a checking account. This type of account can also have a minimum balance, but it usually isn’t quite as much. Before opening any type of account, you should always check the bank’s minimum balance, as it tends to differ.

What is a checking account sign-up bonus?

Many institutions offer a sign-up bonus to new patrons as an incentive to use their bank. A checking account with a bonus could be very beneficial, especially if you are running low on cash. In exchange for opening a new account (either savings or checking) with a bank, they could offer you extra money. Some banks even offer bonuses more than once, meaning you will get even more than your one-time sign-up bonus. That is basically free money in your pocket! It is worth shopping around to find a bank that offers a solid bonus for new customers. You could get upwards of $500 by trying out a new bank.

How does writing checks work in relation to my checking account?

Most people learned how to write a check in school. The money in the checks your write comes from your checking account. When the other party cashes your check, it will come out of your checking account, not your savings account. If you do not have enough money in your checking account to cover the amount on the check, your check will bounce. Every check has a routing numbers. Your checking account and routing number are related. A routing number alludes to the location or city where your checking account was opened. To find the routing number, look for the 9-digit number sequence on the bottom left side of your checks.

What is a direct deposit?

Direct deposit is a service offered by most banks. It is a service where your paychecks are automatically placed into your checking account. This means that you do not have to physically visit the bank every time payday rolls around. Sometimes, you will receive your paychecks faster than if you were to get them physically. In order to set up direct deposit with your bank, you will need your bank routing number (as previously mentioned, it can be found in the lower left hand corner of your checks), your account number, your banks address, as well as a voided check.

How do I open a checking account?

Opening a checking account is not hard! If you are minor, you will likely need an adult to co-sign on your account. You should do your research and find a bank that works with your specific needs. The bank will run a background check on your credit history. When you go to the bank to open your account, you will need to bring your social security card as well as proof of identification. After that, you will get a debit card and finally have access to your new checking account!

How can I avoid extra fees?

If you are looking to waive extra overdraft fees in general, you may want to look into an online bank. Online banks generally have more reasonable fees and offer free checking accounts. This means they are generally a cheaper option than a brick and mortar bank. This is not always the case though, so you should do your research before making any serious commitments. Look for a bank with low monthly maintenance fees. Some banks will waive maintenance fees if you maintain a good account balance or set up direct deposit. Always read the fine print before doing business with any bank. Make sure you have plenty of money in your account. If you take out more money than you have, you will subject yourself to overdraft fees. ATM’s that do not belong to your bank can also harbor extra fees. It can cost up to $3 to get money out of an ATM not owned by your bank. However, this is usually a lot cheaper cashing a check at a machine.

How do I use ATM’s?

As previously mentioned, ATM’s can sometimes come with additional fees. You can deposit and withdrawal money at an ATM. You can also check your balance. Some ATM’s let your transfer money between accounts, and a few even sell stamps! They are definitely versatile and worth knowing how to use. To use one, simply insert an ATM or debit card (you should have received these when you opened your account) and enter your PIN into the machine. If you ever lose one of these cards, you should report it to your bank. They can freeze your account to prevent a thief from taking out any of your money.

What is the final verdict?

A checking account is a beneficial tool if you know how to utilize it correctly. It can make your life (and finances!) more convenient. When you open a checking account, you gain the ability to access your money anytime, anywhere. Opening a checking account can seem daunting, but armed with the proper information, you can become far more knowledgeable!