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What is Checking Account?

Updated on June 2, 2023 , 370 views

A checking account refers to a deposit account that allows users to make deposits and withdrawals in a fast and hassle-free manner. You could open the checking out at any credit union or financial institution. Checking accounts has become a common tool for people who are looking for a flexible option to make deposits and withdrawals quickly. Whether you need to receive your paycheck or send money to someone’s account, a checking account can be used to complete any number of financial transactions easily.

Checking account

Research shows that around 79% of US residents have a checking account. The major advantage of the checking account is that it provides you with quick access to your money. You can process any type of financial transaction on a regular Basis with a checking account. The checking account allows you to process unlimited deposits and withdrawals daily. However, some banks and credit unions have implemented a maximum limit for such transactions that could vary from $300 and $5000.

Checking Account and Associated Fees

The main application of the checking account is to keep your money in a safe place for a short duration so that you could use it anytime you want. You can use this money whenever you want to make the bill payments. Many employees ask the HR department to issue their payroll and transfer their checks to the checking account.

This is known as the direct deposit. They may keep the entire sum in the checking account or transfer some part of the Earnings to the Savings Account. While a checking account facilitates quick and convenient transactions, it must not be used for any kind of long-term objective. For example, if you are planning to save money for a long-term investment or you want to buy a house, then the checking account is not your best option. It does not offer you any lucrative interest option.

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Fee Charged

Many credit unions and banks charge a Flat monthly fee for the maintenance of your checking account. This fee could Range from a few bucks to hundreds of dollars, depending on the number of transactions you process regularly and the total amount you deposit into the account. The monthly fee is mainly charged when the user fails to maintain the minimum account balance. The fee requirements will be waived if you meet the requirements of the Bank. You could also find the no-fee checking accounts that are available for zero monthly fees.

Overdraft Fees

Never spend an amount more than what’s available in your account, or you will end up paying an overdraft fee that could be as high as $30. In order to avoid this fee, make sure you sign up for overdraft protection. This will prevent the user from spending an amount higher than what’s saved in the checking account. It might also help you get the funds transferred from the linked savings account to your checking account.

All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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