The Complete Guide to Checking Accounts

A checking account is a type of bank account that offers easy access to deposited funds. Unlike other types of bank accounts—including savings—checking accounts typically allow unlimited withdrawals and deposits, making them a good choice to to use for everyday spending.

However, checking accounts tend to pay low interest rates (if they pay interest at all) compared to savings accounts, certificates of deposit (CDs), and other accounts that allow you to grow your money. Consider using your checking account only for the money you’ll want to access for daily purchases and your monthly bills and investing your other money in assets that offer higher earnings potential.

How to Use Checking Accounts

There are several convenient ways to access the money in a checking account. For example, you can:

• Write checks
• Deposit paper checks using a mobile app
• Make purchases with a debit card connected to your account
• Make withdrawals and deposits with your ATM card
• Visit your local branch to make withdrawals and deposits
• Use the bank’s online bill pay service to pay one-time bills or set up recurring payments
• Set up automatic payments through a company where you have an account, such as utilities and credit cards
• Transfer funds to and from other bank accounts

Before opening a checking account, it’s helpful to understand the different types of accounts that are available, as well as the practical aspects of maintaining a checking account–such as how to write a check and balance your account. To get you started, here’s a quick guide to help you choose and manage a checking account.

Free Checking Accounts (and How to Qualify for One)

According to the Consumer Financial Protection Bureau, any account described or advertised as "free" or "no cost" cannot have:

• Minimum balance requirements
• Monthly maintenance or service fees
• Excess-transaction fees
• Fees to deposit, withdraw, or transfer money

Free doesn’t mean it's without any fees at all. You’ll still be on the hook for any overdraft charges and other fees, such as:

• Dormant account fees
• ATM fees
• Bounced check fees
• Balance inquiry fees
• Check-printing fees
• Stop payment fees

The bank or credit union can change your account type and start charging more fees if it notifies you 30 days in advance.

Interest-Bearing Checking Accounts

With an interest-bearing checking account or high-yield checking account, you earn interest on the money in the account—just as you would in a savings account. Unlike a savings account, however, you’ll be able to write checks and use your debit card to make purchases and pay bills.

Not all banks offer interest-bearing checking accounts, and those that do may have minimum balance requirements (which could be quite high).

You may also see monthly maintenance fees and other requirements, such as a minimum number of debit card transactions each month. Interest rates vary greatly by bank, so it pays to shop around if interest is important to you. In general, you’ll find better rates at credit unions.

Premium Accounts and Qualifications

Premium checking accounts offer benefits beyond what you get with a standard account. Perks vary by bank and can include interest payments, waived fees (e.g., free notary services and free money orders), free financial advice, and discounts on the bank’s other financial products. At some banks, you can earn reward points when you make purchases, which can be redeemed for eligible products and services.

In general, premium accounts require a higher balance than standard accounts in order to have the monthly fee waived. For instance, with Chase Premier Plus Checking, you'll need an average beginning day balance of $15,000 in deposits with Chase, or you'll pay a $25 monthly fee.

Lifeline and Second Chance Checking Accounts

Lifeline accounts (sometimes called basic accounts) are streamlined checking accounts designed for low-income customers. These accounts typically have low balance requirements and no monthly fees.

Basic features like check writing are included, but you may be limited to a certain number of transactions each month. Large banks offer these accounts to provide banking services to the broad public–and some states require banks to offer them.

Another type of account is a second chance checking account, also called a "lower risk account." This account type may be a good option if you’ve been turned down for a checking account due to a past banking mistake or bad credit. A second chance account is usually designed to help you avoid overdrawing your account. After a period of meeting the bank's expectations, you may even be able to transition to a traditional account with better terms.

These accounts typically have monthly fees that can’t be waived. You may be required to set up a direct deposit and/or complete a money management class.

Joint Checking

A joint account is a bank account shared by two or more people, often relatives or business partners. A joint checking account functions like a standard checking account, but each named account holder can contribute to and use the money in the account. These accounts are useful for couples, parents and teenagers, and adult children helping aging parents manage their finances.

Since everyone on the account has access to the funds, it’s important to set clear expectations from the start to avoid potential problems and overdrawing the account. Depending on the institution and state law, anyone on the account may be able to empty the joint account or even close the account altogether.

Trust Checking

If you are not a trustee or a trust beneficiary, this type of checking account likely won’t be on your radar. In any type of trust account, a trustee controls the account assets for the benefit of another person or group. The trustee is often a family member, attorney, or accountant who has accepted responsibility for managing the account.

A trust typically needs its own checking account, which allows the trustee(s) to pay bills, make payments to beneficiaries (per the trust agreement), and manage the trust’s funds. A trust must be established before a trust checking account can be opened.

Only the designated trustee(s) can open a bank account on behalf of the trust. In some cases, a trust agreement may contain rules regarding trust checking accounts—for example, that the trust must use a certain bank.

Student Accounts

Student checking accounts function just like standard checking accounts. Some banks and credit unions could offer a monthly maintenance fee waiver–or at least a discount on the monthly fee–for student checking accounts.

Recent CFPB research seems to indicate that students may want to be cautious about student accounts and shop around for options. Some student accounts could charge higher fees and penalties, with challenging requirements around qualifying balances and deposits.

As with other checking accounts, you may be able to avoid fees if you set up direct deposit, maintain a minimum daily balance, or make a certain number of debit card purchases each month. Student checking accounts are typically available to students ages 17-24. You may be required to provide proof of active enrollment in a qualifying high school, college, university, or vocational program. 

ATM/Debit Cards

Debit cards let you easily access the money in your checking account to pay for everyday expenses. Debit cards function like credit cards, except that money comes out of your checking account when you make a purchase. Essentially, using a debit card is just like writing a check, but with the convenience of using plastic.

You can also use your debit card to withdraw cash from your checking account through an ATM in combination with the personal identification number (PIN) you created when opening your account. Note that you may be charged a fee for using your card outside of your bank’s ATM network, by both your bank and the ATM operator.

How to Write a Check

Writing a check can be confusing when you haven’t done it before, but it’s simple once you know what goes where. Here’s a quick look at how to write a check:

• Fill out today’s date on the short line on the top right side of the check.
• On the line next to PAY TO THE ORDER OF, enter the name of the person or company you intend to give money to.
• In the box to the right of this line and the dollar sign, enter the amount the check is for, using numerals (e.g., 97.98).
• On the next line, write out in words the dollar amount of the check (e.g., Ninety-seven and 98/100). This amount must match the numbers you entered in the box. To ensure the check won't be tampered with, fill the entire line.
• At the bottom left, you can make a note to help you remember what the check is for; or, if you’re paying a bill and the company asks you to include an account number, put it here.
• Your signature goes on the line at the bottom right. Your check won’t be accepted without a signature, so be sure to include it.

It’s a good idea to fill out checks using the same process every time to make sure you include everything. You can work your way through from top to bottom. Here’s how the check looks before it’s filled out:

How to Balance a Checking Account

A basic way to manage your checking account is to balance your checkbook. This involves recording the dates and amounts of all your withdrawals and debit card purchases, plus any deposits and electronic transfers. Then, doing the math to make sure your balance matches your statement each month.

To do this, check all the transactions on your statement against your entries to ensure everything matches, that you haven’t left anything out, and that there aren’t any math errors. When everything matches, your account is balanced. If it doesn’t balance, start by looking for transactions that may not have gotten recorded, and then check your math. Remember to include any interest earned.

Balancing your checkbook regularly helps ensure you know how much money is in your account, which can keep you from overdrawing your account. You can track your transactions in your checkbook ledger, with a spreadsheet, or using an app (such as Mint).

If you’re unwilling to balance your checkbook, you should at least check your balance online or with the bank’s app. You may also be able to sign up for text alerts that let you know if your account falls below a threshold that you specify.

How Banks Protect Your Money

If your bank is a member of the Federal Deposit Insurance Corporation (FDIC), your deposits are guaranteed up to $250,000 per depositor for each account ownership category (e.g., single owner vs. joint owner). That means if you have different types of accounts at your bank–say, a checking account, a savings account, and a certificate of deposit (CD)–all together, they are insured for up to $250,000 if the bank fails. Coverage is automatic when you open an account at an FDIC-insured bank, and it’s backed by the full faith and credit of the United States government.

Credit unions offer comparable insurance. If your credit union is a member of the National Credit Union Share Insurance Fund (NCUSIF), your “shares” (what credit unions call your deposits) are insured in a way that's similar to how your deposits are protected at an FDIC-insured bank.

All federal credit unions are insured by the NCUSIF, administered by the National Credit Union Administration (NCUA); state credit unions can be insured by NCUSIF or through their own state or private insurance.

Frequently Asked Questions (FAQs)

The Bottom Line

You have lots of options if you’re shopping for a checking account. One of the first things to consider is whether you want to open an account with an online bank or at your local brick-and-mortar bank. In general, online banks offer perks like lower fees, better interest rates, convenience, and free ATM access to a typically large network of ATMs. However, online banks don’t offer in-person assistance, which means you’ll have to sort through a touchtone phone menu to reach a real person.

Still, many people enjoy online accounts, as most banks today provide robust apps making it easy to deposit, withdraw, and transfer money. If you’re worried about Internet security, reputable online banks with up-to-date security measures are just as safe as brick-and-mortar banks. To find out how a specific bank protects your information, search for that bank’s name + security (e.g., Ally + security). The result should link you to the bank’s security center.

Once you decide if you’d rather open an account at an online or a brick-and-mortar bank, you can start comparing your options, such as account types (e.g., student checking or joint checking), minimum balance requirements, monthly maintenance fees, and the like. If you have any questions, don’t hesitate to reach out to a bank representative, either in person (at a local branch) or by using the bank’s online chat feature (if available) or customer service phone line.