Checking Account

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What is a Checking Account?

A checking account is a common offering of financial institutions including credit unions, savings and loans, and banks. This account allows businesses and individuals to withdraw funds and deposit money from an account which is federally protected.

Benefits of a Checking Account

The checking account terms vary from one financial institution to another. However, for the most part, the holder of the checking account can use their personal checks in order to replace cash and can use these checks to pay for bills and eliminate their debt. She or he can additionally use ATM cards and electronic debit cards in order to access their account and make withdrawals from their account.

What do Financial Institutions Offer?

The majority of banks offer a form of checking account for the customers of their institution. Some may require clients to contribute a minimal deposit before the account can be established, along with some proof of the potential account holder’s address and identification information. A low-income applicant such as a student may be able to obtain a checking account that does not come with fees for basic services such as personal checks.

Other customers can maintain a high balance each month and benefit from high interest payments. Some states possess laws that require that they provide customers with low income and senior citizens with “lifeline” checking accounts. This checking account form does not come with the majority of the fees that are normally charged by banks, such as ATM surcharges and monthly fees for financial service.

How are Checking Accounts and Checks Handled?

The average checking account is maintained through the careful posting of account withdrawals and deposits. The holder of the account will obtain a series of official checks which list the essential mailing and routing information that is required for billing purposes. When the check is completed correctly, the recipient of the check treats the check in a similar manner as cash. Because of this, a check can be used in order to pay a bill and complete a required transaction.

After the depositing of the check within the bank account of the recipient, the worker at the bank will electronically file the check and the financial institution belonging to the writer of the check will receive the canceled check. It is then that the withdrawn or debited amount will be taken from the account of the check writer. This process is followed with the use of every check that is written by the account owner.

Responsibilities of the Checking Account Owner

Although the bank does provide customers with accounting statements, the owners of the check account are the ones who are ultimately responsible for their account and for tracking the funds that are available. Checks need the represent the amount of money that is equal to or less than the amount that is contained within the checking account. If the amount on the check is written to be higher than the amount which is available, the writer of the check will have to pay several fees and may have to undergo potential legal action.

If the check is deemed to be a “bad check” by the recipient, the writer may be required to pay immediately in cash for both the original cost as well as a fee to compensate for the bad check. Some financial institutions will protect the account holders by making payments and notifying the writer of the check that an overdraft of the account has occurred. The bank will more than likely recover those losses by installing service charges so you should make sure that you do not write checks unless you know that you have enough money in the account to cover the costs.

How Account Holders Access Account Information

The majority of banks have several means by which account holders can access their account information. Statements pertaining to credit and debit information will also be mailed to the holders of the accounts as well. ATM machines also offer customers to access balance information as do phone-in and online accounts.

As long as the holder of the account maintains accurate records of their finances, the checking account can provide an efficient and safe way to deposit money from sources of income and pay bills. Although a savings account may be able to pay increased interest over a long period a time, a checking account can replace cash when it comes to paying bills such as credit card bills, utility bills, and mortgage payments.

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