How Does A Checking Account Work?

Of the various types of accounts offered by banks, the checking account is the most important and also the most opted for. In addition to banks, there are many other financial institutions such as credit unions and other loan lending agencies that offer checking account service to customers. A checking account is federally protected and allows the account holder to either deposit or withdraw money from this account.

The rules that govern a checking account are dependent on the bank and varies from one bank to the other. However, all banks do offer the customer an option of using checks to repay debts instead of cash. Added to checks, customers can also use ATM cards to withdraw money from their account.

There are various rules applicable when you decide to open a checking account. While most of the banks do insist on a minimum deposit while opening the account, there are other banks that open the account without any minimum deposit. You will need to provide your address proof and identity proof while opening this account. A no-frills account (an account void of minimum deposit and high fees) is generally offered to only students and applicants with low income. Many banks also extend this service to senior citizens as well.

Once you open a checking account, you will be given a check book and also an ATM or debit card (the latter is available from most banks only if you opt for it). Whenever you need to repay any money, you can issues these checks to the person or institution to whom you need to repay. They will present this check and get the amount deposited in their account. However, you need to be aware of the balance present in your account before you write out any check. If you write out a check for an amount that is not available in your checking account, it can attract legal charges and other penalties and fine. It will result in a black mark on your account. If you opt for the overdraft facility, the banks will cover you up to a certain amount even if the funds are not present in your account. You will have to pay extra charges to avail this facility and there are many rules and regulations that govern this service too.

You can keep track of the balance in your checking account by opting for internet banking or periodic statements from your bank. You can also get this information over the phone if you have the required information handy.