Checking Accounts

image
Take your confidence to the next level with the right checking account.

A checking account is a deposit account with a bank or other financial firm that allows the holder to make deposits and withdrawals. Checking accounts are very liquid, allowing for numerous deposits and withdrawals, as opposed to less-liquid savings or investment accounts. The tradeoff for increased liquidity is that checking accounts don't offer holders much, if any, interest. Money can be deposited at banks and via ATMs, through direct deposit or other electronic transfer; account holders can withdraw funds via banks and ATMs, by writing checks, or using electronic debit or credit cards paired with their accounts. It's important to keep track of checking account fees, which are assessed for overdrafts, writing too many checks—and at some banks—allowing the account balance to drop below the required minimum.

Want help choosing the right checking account?

Advances in electronic banking have made checking accounts more convenient to use. Customers can now pay bills via electronic transfers, thus eliminating the need for writing and mailing paper checks. They can also set up automatic payments of routine monthly expenses, and they can use smartphone apps for making deposits or transfers.

For accounts with large balances, banks often provide a service to "sweep" the checking account. This involves withdrawing most of the excess cash in the account and investing it in overnight interest-bearing funds. At the beginning of the next business day, the funds are deposited back into the checking account along with the interest earned overnight.

Consumers can set up checking accounts at bank branches or through a financial institution's website. To deposit funds, account holders can use ATMs, direct deposit, and over-the-counter deposits. To access their funds, they can write checks, use ATMs or use electronic debit or credit cards connected to their accounts.

Cash Rewards Redemption:

Because money held in checking accounts is so liquid, aggregate balances nationwide are used in the calculation of the M1, money supply. M1 is one measure of the money supply, and it includes the sum of all transaction deposits held at depository institutions, as well as currency held by the public. M2, another measure, includes all of the funds accounted for in M1, as well as those in savings accounts, small-denomination time deposits, and retail money market mutual fund shares.