Checking Accounts

A checking account makes personal financial transactions simple, efficient, and reliable—even if you don’t write paper checks. Learn how to treat a checking account as a fundamental personal finance tool.

Frequently Asked Questions

  • How do you open a checking account?

    Opening a checking account is as simple as filling out a form with the bank or credit union. You’ll also need to provide some information, including your address, a Social Security number or other tax ID number, and your date of birth. A driver’s license or other state-issued ID and a bill with your name and address on it is usually all the documentation required.

    Learn More: What Is an Interest Checking Account?
  • What do you need to open a checking account?

    You’ll need at least two forms of identification—a driver’s license and a bill with your home address, for example—and you may need a small opening deposit of $100 or less, depending on the bank. Banks and credit unions don’t check your credit score, but they may check your profile through ChexSystems (which tracks bank account activity rather than credit account activity) to make sure you haven’t mismanaged a checking account in the past.

    Learn More: What Is ChexSystems?
  • Can you set up a checking account online?

    It depends on the bank or credit union. Some banks and credit unions require you to open an account in person, while others allow you to open an account online. And some banks and credit unions are online-only, so online is the only way you can set up a checking account with those institutions.

    Learn More: Best Online Checking Accounts of 2021
  • What is the difference between a checking and savings account?

    A checking account is used for everyday spending, and there are no restrictions on how many purchases or transactions you can make per month. A savings account, on the other hand, is designed to hold money that you don’t expect to spend soon, and money stored in this account usually earns a bit of interest. The Federal Reserve used to cap the number of “convenient,” non-branch transactions account holders could make with a savings account, but that restriction is no longer a regulation (although many banks still do enforce transaction limits).

    Learn More: Differences Between Checking and Savings Accounts
  • Can you open a bank account with no money?

    Yes, some banks and credit unions allow you to open an account with no money, while others require a minimum opening deposit of $25 to $100.

    Learn More: How Much Money Should You Keep in Checking and Savings?
  • How do you close a checking account?

    You can close a checking account by notifying your bank. If you have any outstanding fees or overdrawn balances, you’ll need to settle those up. If you have any automatic deposits or payments associated with the account, you should also make plans for those—redirect your deposits to another account and reschedule your automatic payments from another account as well.

    Learn More: How To Close Your Checking Account

Key Terms

  • Bank Statement

    A bank statement is a document prepared by your financial institution each month. With a bank statement, you can see all of the income and spending activity related to the account.

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  • Overdraft

    When you don’t have enough money in your financial account to cover a transaction, but your institution honors it anyway, you’ve been said to have an overdraft. An overdraft allows you to continue using funds in your account even when it has a negative balance, but you’re required to replace the money and usually pay a fee.

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  • Deposit

    Banks and credit unions are referring to the money in your accounts when they use the term "deposit." They're holding onto this money for you. Deposits can also refer to other valuables the institution holds for you, such as jewelry in a safety deposit box. You can access the deposited money by spending on that account with a debit card, paying bills online, writing checks, or by taking cash withdrawals.

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  • Annual Percentage Yield

    Annual percentage yield is the annual percentage of profit earned on an investment, which takes into account the effect of compounding interest.

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  • Money Order

    A money order is a method of paying for something with cash using a check from a third party. You pay for the money order, and the third party issues you a check that you can give or send to someone. This person deposits the money order in their bank account or exchanges it for cash at a business or post office.

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  • Escheatment

    When money lies dormant in a deposit account or appears to be abandoned, the bank or other organizations with which the money was deposited aren’t necessarily allowed to just keep that money for their own use. After a period of time, they’re required to turn it over to the state. This is called escheatment.

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  • Wire Transfer

    A wire transfer is a method of moving funds electronically. It can go between both banks and credit unions. It can also be sent either domestically or internationally.

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  • Debit Card

    A debit card allows users to make payments directly from their bank accounts using credit card networks instead of paper checks. When you buy something with a debit card, the money comes directly from your checking account.

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  • ACH Debit

    Automated clearinghouse (ACH) payments are electronic payments that pull funds directly from your checking account. Instead of writing out a paper check or initiating a debit or credit card transaction, the money moves automatically.

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  • Credit Unions

    Credit unions are nonprofit organizations that provide financial services to their members. If you need to save money, pay bills, or get a loan, a credit union is an all-in-one option for those services.

    Learn More
  • Interest Checking Account

    An interest checking account is a checking account that accrues interest on the money in your account. As long as the requirements to earn interest are manageable, the interest benefit of these accounts gives savers an opportunity to grow their deposits on autopilot.

    Learn More
Couple at a bank.
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Woman placing money into her wallet
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Image shows three figures with arrows pointing from one character to the next and the endorsement area on the back of a check. Text reads; How to Sign Over a Check. Friend 1, The person writing the check. You, the person signing the check over. Friend 2, the person depositing the check. Ask friend A’s bank if they will allow you to sign the check over to friend B. Ask friend B’s bank if they will accept a check signed over to their customer. In the endorsement area on the back of the check, write “Pay to the order of” and then include the full name of friend B. Endorse the check with your signature.
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Entering PIN
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How to endorse a check including when and how to sign it such as where to endorse it on the back of the check: To be endorsed correctly, the name on the back of the check needs to match the payee name written on the front of the check. A blank endorsement has you only signing your name; a restrictive endorsement has you signing your name and "For deposit only"; and to sign it over to someone else, sign your name and write "Pay to the order of" with the person's name.
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Image shows a woman online checking her checking account balance online. Beside her are four credit cards, a check, and a scale.
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Consumer looking at phone with debit card in hand. An open laptop is in front.
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Illustration of a check describing the different line items
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Text reads: Where to Cash a Check Without Paying a Fee. Your bank or credit union, checkwriter's bank, retail stores, prepaid cards, and check cashing stores.
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Image shows a man handing a bank teller a check. Text reads: "What to know about check expiration: personal checks are typically valid for six months after the date written on the check; if it's been more than six months, you may want to ask for a re-issued check; if you write a replacement check, it's wise to request a stop payment on the original check"
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woman at bank counter
Certified Check
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Person writing a check in a checkbook
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Image shows a counter-check and a pen on a string sitting on a wooden table. The images above show a bank teller, a hand filling out a check, and someone holding the check. Text reads: "What are counter checks? You can get counter checks at a bank branch, typically from a teller or a personal banker. Can be printed and used instantly, so they're available immediately after you open a new account. Handy in a pinch, or if you run out of checks and need one quickly"
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Image shows a woman depositing a check on her phone. Text reads: "How to quickly cash a check: certain checks, like cashier's checks, payroll checks, and those issued by the government process quickly. Big-box stores and convenience stores often cash checks for a modest fee; use your judgement when it comes to cashing postdated checks"
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'Text on check, close-up'
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Title: How to Deposit Checks. Showing person using a smartphone to take a photo of the check, visiting a teller at a branch location, placing the check into a mailing envelope, and using an automatic teller (ATM).
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This illustration shows what you need to know about ATM withdrawal limits including that withdrawal limits are only applied to checking accounts, larger amounts can be withdrawn from savings accounts, some accounts, like student accounts, may have lower limits, and the typical daily ATM withdrawal limit is $300 to $500.
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A check
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Young family with two children making a purchase using a debit card.
Check Card
 
 
 
 

Page Sources

  1. ChexSystems. "About ChexSystems."

  2. Board Of Governors of The Federal Reserve System. "Consumer Affairs Letters, CA 21-6: Suspension of Regulation D Examination Procedures."

  3. Bureau of the Fiscal Service. "Automated Clearing House."