Common terms used in a checking account

Checking accounts are services provided by banks and other financial institutions. These accounts are federally protected which allows individuals to make deposits and withdrawals. Money can be transferred to a third party by issuing checks rather than an upfront cash payment. It avoids the risk of carrying around cash in the pocket and provides a safe mode of transfer. Money deposits and withdrawal can also be done though ATM’s and Debit cards by exercising these options. All transactions can be made through ATM’s. The details of all transactions made are recorded in the pass book for future referral.

Terms and conditions of this account vary from bank to bank. An indebt understanding and knowledge of these terms are required by an individual prior to opening a checking account. Investing in an account which does not comply with one’s requirements could leave him disappointed. There are various perks offered by checking accounts. One should carry out a survey of all the available options and decide on an account that suits him best.

One should familiarize himself with the commonly used terms associated with a checking account as this would help in understanding these accounts better.

The following are a list of terms associated with this account.

Service charges:

The bank has to make sure that it is earning revenue on every account it maintains. The returns on an account with small deposits are not very lucrative, hence by way of service charges the bank makes up the difference. They may charge monthly maintenance fees, or may state a minimum balance required to maintain an account.

Direct deposit: These are services where salaries can be deposited directly into the account of the companies’ employees by the employer.

Bill pay: These are services where one can pay his bill directly through online facilities.

Over draft: If one issues a check above the balance present in his account the bank pays the difference, but the account holder is liable to penalty charges. The terms of the over draft option must be read between the lines.

ACH: It stands for automated clearing house. They are computer based exchange schemes where all transactions can be made online.

ATM surcharge: These are charges applicable when one uses an ATM other than the one owned by his bank.

Joint checking:  Accounts shared by two people who share common house hold expenses.

Interest bearing accounts:  Interest is usually on the balance maintained. These accounts may bear a high minimum balance