Choosing and Using a Checking Account

Checks are a popular method of payment for many people in the US. When you write a check, it is a promise that your bank will pay the specified amount from your account to the person to whom you wrote the check, or to the bearer of the check if there is no named recipient. Checks leave a useful paper trail as they pass from you to the recipient and through the banks. This trail provides proof of payment and discourages theft. Checks can safely be sent through the mail.

The checking accounts offered by different banks can vary in a number of ways therefore it is important to consider how you want to use your new checking account and to shop around before opening one. The main considerations are the fees that the bank charges, whether you will earn any interest on the balance in your account, and what services the bank provides. Some checking accounts provide you with additional ways of accessing your money, such as an ATM and/or debit card, for example. There may also be special offers or rewards programs associated with some accounts, although you should be careful not to allow yourself to be blinded by these into opening an account with high fees or other significant disadvantages.

You will need to deposit funds into your checking account in order to open and use it, and then to ensure that there is always enough money in your account to cover the checks that you write. Setting up direct debits into the account is a convenient way of ensuring that there is always some money available, but you can also make individual payments. There may be a minimum balance below which your account should not be allowed to fall. If your balance reaches this minimum, the account may be automatically closed.

Once you have funds available in your account, you can begin to write checks. Take care to make your checks legible and to fill in all the essential parts. Make sure you record each check in your checkbook register, as this will help you to keep track of what you are spending. You may also be able to access your account through an ATM or debit card.

Some banks may allow you to arrange an overdraft for a checking account. This is essentially a loan that you will dip into if your balance drops below zero. An overdraft can be useful as it provides some leeway in your account, but you will probably be charged interest when your account goes into negative figures.

You should regularly balance your checkbook to work out the true amount that is available, including all the outstanding transactions that have not yet appeared on your bank statement. This will ensure you do not overspend and incur penalty fees. Online banking can help you to keep track of your account, but remember that transactions do not appear immediately even on an online statement.