Every professional in the working world, even teenagers should consider opening a checking account as soon as possible—the benefits and uses are significant.
In this guide, we’re going to outline what a checking account is. Specifically, we’re going to discuss online checking accounts and compare them against their brick-and-mortar counterparts. Finally, we’ll review savings accounts and list the differences.
What Is a Checking Account?
To expand on the simple definition itself, I also looked at other components which make this financial tool a checking account, as opposed to other types. Typically, this type – including free checking accounts – will include:
- The ability to access funds using paper checks
- The use of ATMs (automated teller machines)
- The use of a debit card for point-of-sale and other mobile purchases
- Transactional liquidity – allowance of numerous withdrawals and typically unlimited deposits, unlike other account types which limit these transactions
In addition to these characteristics, checking accounts are available to meet different needs. Student accounts often come with lower, or no, fees. Business accounts help you keep your personal and business transactions separate. Joint accounts allow you to add other people like your spouse so that they can also carry out transactions like deposits and purchases.
Online Checking Accounts vs Savings Accounts
When you’re in the market to open a checking account online, you may also be looking for an option that offers you a savings account as well. But how do you know which one you need, or if you need both? I took a look at this aspect of online-only banking when investigating the best bank accounts online in order to give you the big picture:
Online Checking Accounts
- Intended for daily or frequent use
- No (or very lenient) restrictions on withdrawals and deposits
- Access at any time
- Ability to use automatic bill pay, money transfers, and other external transactions
- Low (or no) interest rate earned
Online Savings Accounts
- Intended for moderate- to long-term use in order to save and earn interest
- Restrictions on withdrawals, typically between 3 and 6 permitted per month
- Access limited, sometimes requiring transfer to checking first
- Typically, no external facility transfers permitted
- Higher interest rate than checking One factor that can vary to a high degree among both checking and savings accounts is the fee structure. When shopping for the best bank accounts be sure to read all of the fine print on fees, regardless of the type you’re looking to open.
