Smart Money Management: Finding the Perfect Checking Account

Opening a checking account at an FDIC-insured bank is your ticket to financial convenience.

Checking accounts typically provide you with a debit card, checks, and the ability to pay bills online. This means no more trips to the corner store to pay your utility bill using an expensive payment service provider.

There are many different kinds of checking accounts. We’ve created this guide to checking accounts to help you determine which type of account best fits your needs.

How Does a Checking Account Work?

A checking account is a basic financial tool that allows individuals to manage their day-to-day expenses and transactions easily.

It provides a safe place to deposit money, offers quick access through methods like checks and debit cards, and enables online bill payments.

Essentially, it serves as a financial hub for personal or business finances, making it a fundamental part of modern banking.

There are various types of checking accounts tailored to specific needs:

1. Traditional Checking: Standard accounts for general banking needs, offering basic services like check writing and online bill pay.
2. Premium Checking: These accounts provide additional benefits such as ATM fee reimbursements, financial counseling, and safe deposit box access. They are ideal for those with larger account balances.
3. Interest-Bearing Checking: These accounts offer modest interest on the account balance, making them suitable for individuals with significant funds.
4. Cash-Back & Rewards Checking: Reward account holders with cash, points, or perks for using their debit cards.
5. Student Checking: Designed for students, offering features like overdraft forgiveness and no monthly fees.
6. Business Checking: Ideal for small business owners and gig workers to manage business finances and accept card payments.
7. Second Chance Checking: For individuals with a negative banking history, providing a fresh start.

People should have a checking account for its convenience and essential functions. It enables easy money management and online transactions and can help build financial responsibility. Additionally, it offers security through FDIC insurance and ensures access to essential banking services. The type of checking account chosen should align with an individual’s financial goals and lifestyle.

Find and Compare the Best Checking Accounts Online

Compare rates, fees, accessibility, customer service, and more. Find the best checking account for your needs.

7 Types of Checking Accounts

In addition to increased financial convenience, checking accounts are an excellent tool for money management. Choosing the “best” checking account depends on your needs. Some checking accounts waive monthly maintenance fees — who wants to give $10 to $15 per month to a bank? – while others offer premium services not available on standard accounts.

Let’s take a closer look at seven of the most common types of checking accounts, the features offered, and whom they typically work best for.

Traditional Checking

Traditional checking is the standard checking account from most financial institutions.

Best For:

Consumers who need basic checking account services and keep modest account balances.

Premium Checking

Premium checking accounts work just like traditional accounts, but they usually offer a wide range of additional benefits unavailable to standard banking customers.

Best For:

Banking customers who maintain account balances in the high five-figure range and customers who often make substantial payments using their checking accounts.

Interest-Bearing Checking

With this type of checking account, your money earns a modest bit of interest each month.

Best For:

Consumers with large account balances.

Cash-Back & Rewards

Who doesn’t like earning money while spending it? Cash-back or rewards accounts give account holders points or cash back on most debit card purchases.

Best For:

Frequent shoppers who prefer using their debit cards.

Student Checking

Commonly offered to new banking customers ages 13–25 who lack any banking history.

Best For:

Younger students who are eager to establish a relationship with a bank or credit union and older students who want to manage their money responsibly.

Business Checking

Small business owners and people working in the gig economy should consider having a business checking account to manage better and track their business income and expenses.

Best For:

Gig workers, freelancers, and small business owners who want to avoid commingling business income with their personal finances.

Second Chance Checking

If you’ve ever had problems with a bank and it closed your account due to excessive overdrafts or a negative balance that went unpaid, this type of checking account may be your only option.

Best For:

Banking customers who can’t open standard checking accounts due to adverse banking history.

9 Things to Consider When Choosing a Checking Account

It’s easy to see many different types of checking accounts, all with their own unique set of benefits and potential drawbacks, but choosing a checking account that’s right for your needs can be a complicated decision.

Here are nine things you should consider before opening a checking account.

Average Account Balance

Some checking accounts require you to maintain a certain minimum balance. If you always run on a shoestring budget, consider finding an account with no monthly minimum balance requirements. Alternatively, you can have a checking account with modest account balance requirements within your financial reach.

Banking Habits

Good banking habits are the cornerstone of financial wellness. Do you want to manage your money better, pay bills automatically, or tuck money away instead of having a lot of cash on hand? Your banking habits will help determine which type of checking account offers the best services for your needs.

Fees

Checking account fees vary significantly between financial institutions. Non-branch ATM fees may cost a few dollars, but insufficient funds and overdraft fees can be a big hit. Make you fully understand a bank’s fee structure before opening a checking account. You also may have the ability to have monthly maintenance fees waived through direct deposit or automatic monthly transfers from your checking to your savings account.

Access

Availability can be a blessing and a drawback. Major national banks have ATMs on countless street corners, while small regional banks and credit unions only offer limited ATM access. This may prove beneficial if you are trying to save your money. Some people also prefer in-person banking, so having a bank with multiple nearby locations makes it easier to complete your banking tasks.

Technology

The ability to deposit checks with a few taps on your smartphone is incredibly convenient, as is online banking. If these features are essential to you, larger banks typically offer more robust mobile and online banking platforms than regional banks, yet the latter will still prove quite serviceable. Features such as bill pay, account notifications, and text alerts can also be helpful for your banking satisfaction.

Safety & Security

Your bank should be FDIC-insured, which means you have guaranteed account protection up to $250,000. Features such as multi-factor authentication, fraud alerts, message encryption, and other security measures are common at most banks to protect online account access.

Interest Rates

Most interest-bearing checking accounts offer nominal returns; however, regional credit unions and online banks may offer better interest rates. Make sure you compare potential fees against returns to weigh the viability of an interest checking account.

Perks and Incentives

Banks may offer a range of sign-up perks, including free checks or a cash bonus for using your debit card to make a certain number of purchases in a set time frame.

Customer Service

There will undoubtedly come a time when you need to call your bank to discuss a financial matter. Whether you need to order new checks, cancel a check, apply for a loan, or inquire about another issue, you won’t want to sit on hold for 10 to 15 minutes just to reach an overseas support agent. Personal, immediate, and friendly customer service goes a long way toward having a favorable banking experience.

Frequently Asked Questions (FAQ)