Main Street Finance

How Do Checking Accounts Work?

By admin

At some point or another everyone must open a checking account, and most people use a checking account as a primary source to manage their funds. Whether it’s direct deposit, online funds transfers, or withdrawing money from an ATM, you need a checking account to perform these tasks.

However, many people have questions regarding how their checking account works or features associated with their account. We’re going to answer some of the most frequently asked questions, so you can get the most out of your checking account.

What is a checking account used for?

A checking account is a deposit account held at a financial institution that allows withdrawals and deposits. They are also known as demand accounts or transactional accounts. Account-holders can deposit funds through ATMs, direct deposit, and over-the-counter deposits. To access funds, they can write checks, use ATMs, or use electronic debit or credit cards connected to their accounts.

Online banking has made it easier for customers to access their money and do things such as pay bills. This eliminates the need to write and mail paper checks. Account-holders can also set up recurring monthly payments for routine expenses. Most importantly, for convenience, people can use smartphone apps to make deposits and transfers.

What are the four main types of checking accounts?

There are actually several different types of checking accounts, but we’re going to dive into the four most common accounts.

Personal checking account
Business checking account
Interest-bearing checking account
Joint checking account

Personal checking account:

This term is pretty much a catch-all for different types of checking accounts at a bank. A personal checking account may also be known as a free checking account or online banking account depending on your bank.

Business checking account:

This account helps separate your personal and business finances. Having a business account also allows you to keep track of accurate records that you’ll need when filing taxes each year.

Interest-bearing checking account:

An interest-bearing checking account allows you to earn interest on the money held in your checking account.

Joint checking account:

This account can be held by two people, who share joint ownership. This type of account is common among minors but is also frequently used for spouses, relatives, or even business partners. In a joint account, all funds are owned by both account holders, but both parties are responsible for any fees, overdrafts, or penalties.

Is a debit card a checking account?

Many people are confused about whether a debit card and checking account are the same or not. However, debit cards and checking accounts are not the same, and each has a completely different set of duties.

The main difference between the two is that checking accounts are a place to store money for everyday transactions, and debit cards are tools to access money in linked accounts through ATMs or point-of-sale transactions. In many cases, your debit card is linked to your checking accounts, but they are not the same thing.

What are the various ways you can access your funds in a checking account?

As mentioned above, there are multiple ways to access the funds in your checking account. Account-holders have the option to write checks, use ATMs, or use debit or credit cards connected to their accounts. Also, you can use online banking to view account balances, transfer funds, and deposit funds. Our ever-evolving technology has made accessing banking information easier for customers.

Did you like this article ?