All One Needs to Know About Checking Account

Checking account, also known as transactional deposit account are provided at financial institutions in the way that it allows both withdrawals and deposits in form of liquid funds. Withdrawals are made possible using checks and via electronic debits, automated machines and various other ways. The services of checking accounts are being provided by financial institutions in many sectors including savings, loans and credit unions etc. Individuals and businesses perform deposits and withdrawals from a federally protected account. Besides this definition, the term of checking account may vary from bank to bank.

Different from Conventional Accounts:

A checking account is different from other bank accounts as this allows a large number of withdrawals and unlimited deposits whereas conventional saving accounts can impose limitation on both kinds of dealings. Moreover, checking accounts do not follow a high interest rate in exchange of liquidity offered. Due to these characteristics, checking accounts are also called as “Demand Accounts”.

Minimal Account Fee:

Most of the banking institutions are offering checking accounts with a minimum fee or sometimes with total fee exemption. Due to advancement in electronic banking, users can benefit from checking account through automated monthly routine payments after setting one time setup. Such accounts can be owned by low income persons and even by the students with no-frill terms and conditions. In some countries, banks are legally bound to facilitate the senior citizens by providing low/no fee checking accounts referred as “Life line “accounts.

Easy Payments of Debts:

Checking accounts allow their users to pay debits by using checks if they are not having cash with them. Moreover, debits can be paid also by using debit cards and ATM cards via accessing individual accounts.

The payment through checks is made in very precise and careful postings of withdrawals and deposits. The account holder is supplied with a good quantity of official checks containing all the routing and mailing information. A complete and accurately filled check is treated as cash by the recipient and transaction is confirmed. Later on when the check is deposited to recipient’s bank account, a bank official files the information electronically and the payer’s bank receives the cancelled check. In this way, the amount is debited from check writer’s account. In similar fashion, the process can be repeated over and over again without any hassles.

Fund Record keeping:

Owners of checking account have to track the availability of funds in their accounts. Besides this, bank also issues a routine statement which provides the transactions/payments history along with balance details. However, there is one thing that the owner of this account should be aware of; the check amount should never be higher than the account balance. In case if this happens, the account holder will have to pay a penalty fee. Some financial institutions lay restriction by sending in overdraft information to the account holder. However, in general, the bank usually recovers the loss by imposing a considerable value of service charges.

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