What is a checking account?

A checking account makes it easy to access your money for day-to-day transactions. You can deposit funds via paycheck, cash or account transfer. You can also withdraw funds by using an ATM or debit card, writing a check, or authorizing electronic transfers.

Other standard features include direct deposit and automatic bill pay. Many banks also integrate digital services so you can manage your money from your web browser or smartphone.

You can even find nontraditional checking accounts with benefits such as welcome bonuses, rewards programs and lucrative interest rates.

If you’re ready to open a checking account, you can apply for one at your local bank or credit union in person or online. But read the fine print before you do, as your account may have minimum balance requirements and fees. Banks also enforce an age limit and request specific identification documents.

What are some common types of checking accounts?

Checking accounts come in many shapes and sizes. While a traditional checking account does the trick for most people, you may want one with specfic offerings to fit your needs and goals. These are the types of checking accounts and their typical features:

• Traditional checking. It offers basic features, such as check, debit card and ATM use. You can open these accounts at brick-and-mortar banks, which typically have extensive branch and ATM networks and provide many financial services. (Think Chase or Bank of America.) But you may want to look elsewhere for accounts with competitive interest rates or rewards programs.
• Premium checking. Consider a premium checking account to take your banking to the next level. This type of checking presents exclusive features, such as higher interest earnings, reduced fees, discounts on other financial products and streamlined customer service options. However, premium features often mean higher initial deposit or minimum balance requirements.
• Rewards checking. Consider rewards checking to earn more from your purchases. These accounts offer advantages such as higher interest rates, sign-up bonuses and cash back earnings. You may have to follow requirements such as using your debit card for a minimum number of transactions per month or enrolling in services such as online bill pay.
• Business checking. Business owners know how complex finance management can be. Fortunately, you can get business banking accounts integrating checking with business features. Common features include accounting and payroll tools as well as the ability to accept debit or credit card payments.
• Second-chance checking. Those with limited or poor banking records may encounter challenges during account opening. Second-chance checking makes it easier by waiving typical approval requirements. Accounts may have reduced fees and low minimum balance requirements. This type of account can also help you build a positive banking history with ChexSystems, a service used by financial institutions to evaluate account applicants.
• Student checking. If you’re a young adult seeking a simple account to manage your money, you may like this checking account. It comes with low fees and account balance requirements. Some providers also reimburse you for out-of-network ATM charges.

What to look for in a checking account

The best checking account is like a good car — it has the features you need. Generally, you want to find one based on accessibility as well as your budget and financial goals. Think about the following factors to find the account for you:

• Cost. Standard checking accounts will have minimal fees, such as monthly service, ATM and overdraft fees, as well as ways to waive those charges. An account with premium features will likely have higher fees.
• Features. Think about your financial needs to find the right checking account. Do you want an account with a rewards program, business features or premium checking features? Then, compare types of accounts that align with your needs.
• Interest rates. Standard checking account interest rates tend to be low or nonexistent. For example, a Chase standard checking account yields 0.01% APY. Some checking accounts have higher returns; Axos Bank offers up to 3.30% APY for a rewards checking account.
• Insurance. The Federal Deposit Insurance Corp. (FDIC) insures bank accounts, and the National Credit Union Administration (NCUA) backs credit union accounts. The FDIC and the NCUA protect against the loss of deposits if your federally insured institution fails.
• ATM access. When researching banks, consider ATM availability. Standard national banks often have an extensive network of ATMs, while many online banks have a more limited network. In that case, see if the provider offers fee reimbursements for out-of-network ATM use.
• Branch network. If you prefer to do your banking in person, research banks with a branch near you.
• Digital experience. Traditional bank accounts often offer online and mobile app banking as part of their basic package. Your dashboard allows you to monitor transactions, automate payments, receive direct paycheck deposits and make transfers.
• Customer service. When you have questions about your account, you’ll want a reliable team of agents by your side. The best checking accounts offer 24/7 customer service and various ways to reach out.

As you conduct your search, pay attention to bank account requirements. Banks in most states require signers to be at least 18 years old to apply. Minors can also open an account but must bring a parent or legal guardian to cosign their application.

Pros and cons of checking accounts

Are checking accounts right for you? Weigh the following pros and cons to help with your decision.

How to open a checking account

Opening a checking account is straightforward. Ensure that the process goes smoothly by following these simple steps:

1. Research checking accounts. Before choosing an account, compare fees and features to ensure they match your needs and budget. You may also want to examine different types of checking accounts.
2. Confirm eligibility requirements. Understand account requirements by calling the bank’s customer service line or reviewing its website. Most banks require applicants to be 18 and older to open an account. Minors can apply with a parent or legal guardian cosigner.
3. Verify account requirements. Read the fine print for initial and ongoing charges, such as fees and minimum account balances.
4. Gather documentation. During the application process, banks may require verification documents, such as a Social Security number and proof of address, plus cash or check for the initial deposit. Your financial institution may request additional documentation.
5. Complete an application. Many banks allow you to apply online or at a branch location. Opening an account online and at a branch are generally the same, but you’ll upload documents online instead of handing them to a banker in person. The process can take several minutes or longer. Depending on your financial institution, the approval waiting period could take minutes or a couple of days.
6. Set up digital banking. After you’re approved, download the bank’s mobile app or log in to your online checking to manage your account. You can set up alerts for notifications, bill payments and automatic transfers.

Alternatives to checking accounts

If you can’t or don’t want to use a checking account, consider the following alternatives:

• Money market accounts. They have debit card and check-writing features but higher interest rates than checking accounts. The downside is that these accounts typically have higher minimums and initial opening deposits.
• Savings accounts. Savings accounts tend to yield higher returns than checking accounts, but they typically lack check-writing and debit card capabilities. You may want to pair savings with checking accounts to manage everyday transactions while earning interest.
• Prepaid debit cards. If you don’t want to carry cash, loading your money onto prepaid cards can be a solution. But prepaid debit cards aren’t linked to a bank account, which means you won’t be able to write checks or pay bills.
• CDs. These accounts earn interest for a set period of time, and rates are much higher than checking accounts. But an early withdrawal penalty typically applies if you want to cash out before the end of your CD’s term.
• Cash management accounts (CMAs). Brokerages and investment firms offer CMAs, which combine the higher interest rates of a savings account with checking features. You may even get higher limits on FDIC coverage. These accounts are primarily online.

Frequently asked questions

What is overdraft protection?

Overdraft protection prevents the rejection of charges that exceed your available account balance. You connect a backup account, such as a savings or secondary checking account, to cover purchases when your primary account lacks the funds. Banks have varying fees and terms that come with this service that you’ll want to understand before you opt in to this service.

How do I close a checking account?

Your bank may require you to call or visit a local branch to close your account. Before you do, move your automatic transactions to the new account.

How many checking accounts can I have?

You can have multiple checking accounts, even with the same bank, but keep in mind that having several accounts can complicate managing your money. If your finances are complex, you may need more than one account, though. For example, you may need separate checking accounts for business and personal finances if you run a company, or you may want personal and joint accounts if you have a spouse.