A checking account is a type of financial account that allows you to make money transfers, draw cash on the spot, and deposit checks. It’s very similar to a savings account but offers more flexibility in how you can access your funds. With this convenience comes certain risks, though. If you use your checking account as your primary source of income, then it’s essential to know the benefits of having such an account:
1. Direct deposit to get your money faster
When you open a checking account and deposit your paycheck in it weekly, your money will be available instantly. Unlike a savings account, which can take days before you can withdraw the funds, a checking account ensures you get your money immediately. This is great if you need to pay directly for necessities like groceries or bills. On the other hand, some people prefer to stash their earnings in savings accounts and pull them out when they really need them.
2. Take advantage of online and mobile banking apps
Compared to physical branches, online banking is one of the best ways to manage your finances efficiently and for free. You can check your balances and transaction history from your smartphone, and there’s no need to visit a bank every time you need to make a transfer or deposit money. This is because you can do these tasks online; just like checking accounts, having an online bank account is beneficial but has disadvantages. Online banking means you can hack into your account and make transactions without your consent.
3. Earn Interest
Depending on your account type, you can earn different amounts of interest. Some banks offer low-interest checking accounts that give their customers a minimal reward; some offer weekly or monthly checks that add up to big rewards. For example, Chase Bank has a no-minimum-balance checking account with $5,000 earning 0.05% APY for 90 days; it’s important to note that there’s no maximum balance requirement. Bank of America also offers a high-interest savings account.
4. Keep Your Cash Secure
In the past, banks had a bad reputation for being insecure. This is no longer true however, keeping your money in a checking account is still beneficial because it’s FDIC insured, which means the government guarantees your funds. If anything happens and your bank goes bust, you don’t have to worry about losing your savings.
5. E-Transfer or Pay Bills Online
If you own a regular checking account, you can pay bills directly to your bank using an E-transfer. There are other ways to pay those bills, but they are a bit more complicated. For instance, if you want to pay off an account with a check, you’ll need to work to prepare one and then make sure that the check clears before it reaches the bank and is cashed out.
Having a checking account is beneficial. It allows you to make withdrawals on the spot, it’s convenient and quick for payments, you benefit from mobile banking features, and you get a higher interest rate if you have a high-interest checking account.