What to look for in a Checking Account

What Is a Checking Account?

A checking account is a type of deposit account that allows multiple withdrawals and deposits without any limit on the account. Checking accounts may be held by financial institutions such as banks or credit unions.

Checking Accounts are made for customers who perform lots of transactions daily. Such as students and traders. As the name implies, checking accounts are utilized through the use of checks.

Subsequent development in technology has made Checking accounts easily accessible with debit cards, ATMs, or online banking.

Checking Account

Understand Checking Accounts

You need to understand checking accounts to open one. Checking accounts are accounts opened by customers who perform many transactions daily. A savings account will not be sufficient enough to meet their needs.

This is where a checking account comes in. Since checking accounts allow multiple withdrawals and deposits, they do not attract interest rates. Some may offer interest rates with checking accounts depending on the bank. Some banks will offer interest with checking accounts to attract clients. These interests may be too small to have any meaning.

Checking accounts have minimal interest rates because banks gain money from offering loans through deposits from other customers. Since the customer making use of the checking account can withdraw all his money at any time, there is little chance for banks to generate income. Interest can still be attached to accounts with large deposits.

What to look for in a checking account

As explained earlier checking accounts offer little or no interest, fees are attached to them and some have specific limits on withdrawal. These and more are what to look for in a checking account. The important things to look for in a checking account will now be listed and explained.

  1. Account Fees
  2. Interest rate
  3. Account Limits
  4. Accessibility
  5. Insurance protection

These are the most important things to look for in a checking account. Let us see their impact on the checking account.

Overdraft Fees

We have shown that checking accounts do not grant much income to banks. Because of this, checking accounts attract some fees. One main service that attracts fees from checking accounts is Overdraft protection. Some banks will give you access to a line of credit.

This is meant to help you in case you need to pay for a service that costs more than your balance. This is common because expenses arise from a lot of services. Regardless banks attach a fee to this service. This service is called overdraft protection.

Overdraft fees will be charged starting from the purchase that puts you in debt to further subsequent payments. For example, if you have $100 in your account. You spend $50, $70, and $50. Your bank will charge an overdraft fee starting from the $70 withdrawal. The fees charged are usually much.

When looking for a checking account you should choose one with little overdraft fees, no overdraft protection, or one linked to a line of credit to prevent incurring fees.

Interest Rate

Interest rates are attached to deposit accounts such as savings accounts. Checking accounts also have interest rates attached to them. The interest attached to a checking account could be extremely small depending on the bank. The fees that come with the account will probably be more than the income.

When looking to open a checking account you shouldn’t be focused on the interest rate. If you wish to get interest from banks then a savings account is the option for you. Checking accounts with good interest rates usually have high fees attached to them if your balance goes below the required minimum balance.

Account Limits

By checking account limits, we refer to the required minimum balance and the limits on the amount of withdrawals for a period like a day on the account. If you are someone who makes a lot of withdrawals and transactions you should go for checking accounts that have no withdrawal limits.

Checking accounts’ withdrawal limits can leave you in a bad position if the need for excess withdrawal arises.

Checking accounts with a minimum required deposit usually comes with better interest rates. The downside to this is that they attract fees if you go below the minimum deposit requirement. If you think you can handle the account requirement then you can go for it.


This is the ease at which the account can be accessed. The purpose of opening checking accounts is to perform multiple transactions. For this, the account should be accessible at any time.

Most ATMs offer 24/7 service. Your checking account should also be connected to debit cards. When looking for checking accounts accessibility is very important.


Insurance is a form of financial protection against the loss of an asset offered by financial institutions (banks). When looking for checking accounts you should get one that is insured. Different states have different types of insurance for checking accounts.

In the United States of America, checking accounts are protected by FDIC insurance. It will be explained later in this article. The purpose of insurance is protection in case of failure of your bank.

Why should you have a checking account?

When you want to invest money you open a savings account. You might want to know why you should have a checking account. Well, a checking account is meant for you if you perform lots of transactions daily.

The purpose of a checking account is to keep money you wish to use for transaction purposes. As a student, a marketer, or a businessman, you will have to make lots of transactions. These transactions are unpredictable so they have varying amounts. You wouldn’t want to be denied withdrawal by your bank because you have reached a specified limit.

This is why you should have a checking account. It will serve as a storage for cash set aside for the purpose of transactions. It is advisable to link a savings account or credit account to your checking account to prevent overdraft fees.

Are checking accounts free?

Banks offer many services at a cost. Due to this, you may ask “Are checking accounts free”. The answer to this depends on your bank of choice. Some banks will offer a minimum amount required to open up a checking account.

As stated earlier they may also require a minimum deposit balance. Some charge maintenance fees such are credit card or debit card fees. Checking accounts have one or more fees attached to them. These fees vary depending on the minimum deposit balance set.

A checking account with no minimum deposit balance is hardly free. This is because there is no means of generating income for the bank. They may attach maintenance fees to the account. With a correct search, you can find banks that offer completely free checking accounts. It will be advisable to ensure you go for free accounts with insurance protection. Although they may be hard to come by.

Finding banks that offer free checking accounts may also depend on your state or country.

Do checking accounts earn interest?

Interest rates are usually attached to deposits in banks. Depositing in checking accounts should earn interest. Banks can only give interest if you provide them with a fixed deposit for a certain period. Hence a bank can decide to add a minimum required deposit balance. Checking accounts with a minimum deposit balance will earn you interest. This interest might be smaller compared to a savings account.

Accounts with no minimum required deposit do not have a reasonable interest rate. So if you are looking to earn interest from your checking account it will be advisable to go for those with a minimum deposit. Also, avoid allowing your balance to go below the requirement. This is to prevent incurring high fees.

Are online checking accounts safe?

The internet as we know it is full of those who wish to do away with your money. For the safety of a checking account, you should open checking accounts with trusted online financial institutions. A little Google search should help with this.

You should patronize financial institutions that have good ratings and reviews online. This will help ensure the safety of your money. A Google search for online Checking accounts should provide you with the most popular and safest checking accounts. So to answer the question are online checking accounts safe? Yes, online checking accounts are safe when opened through the right source.

How many checking accounts should I have?

You might want to have many checking accounts for different reasons. One may be to have different backups in case of failure of a bank. Some banks may not have online services at a specific moment and you want to have another go-to in such a situation.

The amount of checking accounts you own may not be of any relevance. Most checking accounts which are deposit accounts do not have any effect on your credit score.

If you do not have a huge sum of money it is advisable not to open multiple checking accounts. This is to avoid attracting unwanted feed when you go below the minimum required deposit. Because you will go beyond the minimum required deposit of your bank if you have a small sum of money with many checking accounts.

On the other hand with an amount of money, it is good to open multiple checking accounts. This is because most checking accounts are insured (FDIC insured). For FDIC-insured checking accounts the account holder is protected in case of failure of the bank. The amount insured is $250,000 per bank. This means with multiple checking accounts in different banks you have more amount of money insured. This will help grant protection for those with huge sums of money.  

So in conclusion the amount of checking accounts you have has no serious effects. So long as you are able to keep the minimum required balance so as not to incur fees from lots of accounts.

How does a high-interest checking account differ from a savings account?

It is possible to get high-interest checking accounts. But they can attract lots of fees and may have a higher minimum required balance. The difference between a savings account and a checking account that offers high interest is simple.

Firstly the limit of withdrawals. While a savings account will have monthly withdrawal limits, checking accounts do not. This is because checking accounts are opened for the sake of performing multiple transactions. Savings accounts on the other hand are open to store money for later use.

Secondly, a checking account high interest rate will attract more fees than a savings account. The bank’s goal is to make profits and this is possible through making loans. Checking accounts does not give the banks this benefit. So they may attach maintenance fees to the account. Larger fees will also be attached if your balance goes below the minimum requirement.

In general, it is advisable to open a savings account rather than a checking account with a high-interest rate.

Frequently Asked Questions About Checking Account

What are deposits

Deposits is the term used to refer to money kept in financial institutions such as banks

What is withdrawal

Withdrawal is collecting money deposited in a bank account such as a checking account and can be done through various means such as using cheques, credit or debit cards, online banking, etc.

What is an FDIC Insured Account

FDIC insurance is an insurance protection provided by the Federal Deposit Insurance Corporation in the event of a bank failure. In the event of a bank failure, an FDIC-insured bank account covers at least $250,000.

What is an Overdraft

Overdraft is when a checking account owner withdraws more money than he or she deposited in the account. Checking account owners are advised to link their savings accounts to their checking accounts to prevent overdraft fees.

What is Overdraft protection

Overdraft protection is a protection offered by banks to checking account owners. Here the banks allow their customers access to more money than deposited in case of emergency services. A fee is attached to this service

What are account fees

These are fees that come with owning a checking account. Such as the maintenance fees for the account or debit and credit cards. And overdraft fees paid by owners that have overdraft protection.


Customers who make multiple transactions regularly should open checking accounts. They should also watch out for what to look for in a checking account to prevent incurring unnecessary debts.