A checking account is a current account in a bank, which is easy to open and allows easy access to money. This account is also known as a transactional account, which is used to make financial transactions and pay bills. A bank allows the money in the checking account to be withdrawn using a check, debit card or through an automatic online transfer.
A checking account is very easy to open and many banks offer a number of bonuses and rewards to the customers who open an account with them. This account can also be attached to other accounts in the bank or other financial products like loans from the same bank. This attaching of two different products also gives a number of rewards or facilities to the customers. Most people confuse the checking account with the savings account. We clearly put down the differences between the two in the next section.
Differences between a checking account and a savings account
- The main difference between the two accounts is their purpose. A checking account is maintained so that every month a certain amount is put in it for expenses. The money in this account does not stay long and goes to vendors and other service providers in the form of monthly bills and EMIs. On the other hand, a savings account is meant for savings wherein, money is deposited in this account for a long term. Most banks require the customers to maintain a particular amount in this account and to keep adding to it on a monthly basis. The bank provides a rate of interest on the account balance in the savings account.
- The next big difference is in the facilities provided with the account. Most banks limit the number of withdrawals that can be made from the savings account on a monthly basis. With checking there are no transaction limits and rules.
- Customers cannot make direct payments from a savings account. This has been decided by a federal law called Regulation D, which monitors certain withdrawals.
- Using the money in a checking account is fairly easy as compared to a savings account. A customer can withdraw money from the checking account using a debit card, check, or a direct transfer to another account. You cannot do all this with a savings account.
How to open a checking account?
The first step towards opening a checking account is finding a good bank that is perfect for your needs. Most banks offer checking accounts and each of them will offer multiple checking options. So, you will have to research a bit to find the bank that gives the best deals in the checking account and charges the lowest fee.
Once you have found the bank that looks perfect, you will need to fill in a form and provide some details to the bank like your social security number and a valid identification proof. Most banks do not open checking accounts for minors, so individuals below the age of 18 will need a co-signer. Once all the formalities are done, the bank will run a background check on you, and if all goes well, you will get a new checking account.