Checking account basics to increase your awareness

There are various types of accounts offered by banks and financial institutions for various purposes. One of the most common among them is the checking account. This account allows you to access funds easily at any point of time. This account can be used to perform various transactions including paying bills and making loan payments. Money from this account can be easily accessed using the debit card or through check. You can also set up direct debit from your checking account.

Whenever you open a checking account, the bank will ask for a minimum deposit to be made. Banks also stipulate a minimum balance that needs to be maintained each month in the account. Various banks offer various features on the checking account they offer. If you want to ensure you find an account that matches your needs to perfection, ensure you compare the features offered by multiple banks and the other charges associated with the account before making your decision.

Look out for the minimum balance required by the bank. If the balance is too much for you to maintain, look out for other options. Banks also levy restrictions on the amount of money you can withdraw in a month and the number of debit transactions as well. Make sure you make a note of all these restrictions before signing on the dotted line.

Certain banks also offer overdraft protection. There are banks that also offer the convenience of linking your checking account with other accounts from which the funds will be withdrawn in case the balance in your checking account dips below the minimum that is required. The overdraft offered by banks allows you to slightly go over the balance and issue checks. However, beyond a particular balance banks begin to return checks which can hamper your credit history. While there are banks that offer standard overdraft facility at very minimal charges, there are a few that charge an arm and a leg. Look out for the cost before opting for a particular facility.

Amounts in the checking account are usually FDIC insured up to $100,000. However, you can earn interest on this money if you invest it in CDs or savings account. Though a few banks and credit unions offer interest on the balance in this account, the rates are definitely lesser than that of savings accounts and CDs.

There are a few things that you need to keep in while operating your checking account. First of all, keep a track of the balance in this account before issuing checks. If you have an account with a bank that has restrictions on debit card usage and withdrawals ensure you keep track of that as well. Going over the prescribed limits can put you in bad books. If you notice any suspicious transaction on your account, ensure you notify the bank at the earliest. Opting for the online banking facility can prove to be very useful to you, especially if you are too busy to visit the bank regularly. Online banking will help you keep track of your account from any part of the world, at any time.