Detailed description of checking account

A checking account is a type of savings account with a slight difference. The difference lies in the number of deposits and withdrawals allowed. In a checking account the account holder has the flexibility of depositing and withdrawing money in and from their account numerous times, which otherwise is restricted in a normal savings account. The account holder has the option of withdrawing money from his checking account with the help of cheques, ATM cards, direct debit options, online debits and so on. Just like any other savings account, checking account can also be in the form of a single account, joint account, student account, current account and so on.

The main purpose of opening a checking account is not to earn interest and neither is it mainly used for savings purpose. The main purpose of opening such an account is to take care of the daily or regular payment of expenses. With the advanced e-banking technology this feature further enhances the benefit of having a checking account. One can take care of the bill payment options with one time instruction given by the bank. However the banks do not consider a checking account beneficial or profit rendering for them due to its high liquidity factor. 

As the number of transactions are more in a checking account and the demand payment is one of its predominant characteristics; a checking account can also be called a transactional account or a Demand account.

In a checking account, the account holder in order to pay his/her expenses or debts, issues a cheque in the name of the beneficiary for the exact amount payable on or before a stipulated date. This cheque is as good as cash for the beneficiary. In an instance where the cheque is drawn for an amount in excess of the available balance in the checking account, the drawer of the cheques calls for penalty charges levied in the account and sometimes has to face legal actions as well.  In such instances where the amount drawn is in excess of the available balance in the account, the banks sometimes provide an overdraft facility depending upon the relationship the account holder has with the bank. For this service the bank charges a substantial fee for it.

Being a high transaction account, the account holder needs to keep track of the deposit and withdrawal of the account so as to have a clear idea of the availability of funds in the account. The banks also provide the balance and the details of the transactions through a passbook, or a computer generated monthly statement of accounts. The customer also has the option of taking out a mini-statement from the ATM (Automated Teller Machine) for the purpose of reconciling their accounts. Other ways of keeping track of the transactions in a checking account are through the phone banking, through net banking and through SMS alerts on the mobile phone of the account holder.

Various banks offer a range of checking accounts with different features and interest rates, the customer should look at the various options and then open an account which best suits his/her requirement.