Features of a checking account that one should be aware of before opening an account

Checking account as the name implies is an account through which money can be transferred to a third party by the issue of a check. The account holder issues a check to the recipient. The recipient then submits the check to his bank. The bank then verifies the details of the check and then posts it online to the account holder’s bank. The money is then debited from his account and transferred to the recipients account.

The main advantage of a checking account is that money deposits and withdrawals can be done without having to go to the bank. All these transactions can be made through an ATM. For this one must own an ATM or a debit card. All transactions can be made by the mere swipe of a card.

Overdraft

One must be aware of the balance present in his account. The issue of a check above the amount present in the account can lead to a creation of an overdraft. This balance is often paid by the bank but what one is usually unaware of is the fact that penalty fees are being charged on every transaction made succeeding that. The bank might also charge daily interest on the balance amount. Hence one has to have a through knowledge of the terms and conditions of the account prior to opening one.

Service charges

Larger accounts would earn the bank some revenue while accounts with small deposits aren’t very profitable to the bank. In order to make of this deficit they charge service charges. The account holder must make sure that he maintains his account above the minimum balance requirement. If the balance in the account falls below the minimum balance service charges come into play.

Direct deposit

These are also known as free accounts. It enables the employer to directly deposit ones paycheck into his bank account. The issue of a check is unnecessary. By enabling this feature banks are put into the safe zone as they can count on the customer to own an active account, hence the banks often offers free checking devoid of any type of service charge.

Electronic transfer funds

This feature that comes in handy when one is running low on balance and requires funds. The money can be directly transferred into his account from another account via the ATM.