One of the staples of managing your personal finances is having a checking account, but the question you might be asking is what is a checking account used for?
Whether you work full-time, are a student or you’re just in need of a place to store your cash, there are many ways to use and benefit from a checking account.
Keep reading to learn more about what a checking account is used for, how you might find one beneficial for your life and a few of the most popular checking account options.
A checking account is an account that provides you with easy access to your cash. You can access your money through a debit card, ATM, by writing checks or even transferring your money between different accounts.
Because they are meant for regular use, you will frequently find checking accounts to have a lower interest rate than other accounts that are meant for saving or investing.
That’s why you don’t want to use your checking account to store money long term. You can generally find a savings account or investment account that provides a better return on your investment.
Though they don’t offer a high-interest rate typically, the checking account is one of the most liquid options you have available aside from cash, so it’s great to store money that you will access regularly or need quickly such as your emergency savings.
A checking account is not a one size fits all option. There are checking accounts explicitly designed for personal use, for students, for those who are rebuilding their credit, and more. So, it’s likely that you could have various types of checking accounts throughout your life or at any given time.
The personal checking account is a catchall for accounts that are meant for personal use. There are many types of checking accounts that you can open, depending on your particular situation.
You might choose to open multiple personal checking accounts to manage your spending. You could have one main account where your paycheck is deposited and you pay your main bills and another account that is solely for your variable expenses such as food and entertainment so you don’t blow your budget.
There’s great flexibility with personal checking accounts that allow you to make the best use of your accounts to fit your financial needs.
A student checking account is also known as a minor checking account. It is specifically for those older than 13 who are in school whether that be middle school, high school, or college.
The student checking account is a great way to introduce young people to personal finance skills as they can deposit and withdraw money and have access to a debit card and checks.
Since this account is geared for those who are still learning to manage a checking account, there are generally low fees and required minimums. You may also find that rules regarding overdrafts and other penalties are more flexible since it’s expected that students will make mistakes as they learn to manage their money with a checking account.
A second-chance checking account is specifically for you if you find it challenging to qualify for a standard checking account due to a poor financial background. Some marks on your financial history that could lead to needing a second-chance checking account include a bad credit score or poor banking history.
Opening a second-chance checking account allows you to practice good financial habits, establish a positive banking history and eventually open a standard checking account.
You will find that second-chance checking accounts are generally easily accessible with low fees and minimum balances; however, there are usually restrictions on use while rebuilding your banking history.
The joint checking account has two account holders with equal access to the funds and the ability to make choices regarding the account. Both account holders are responsible for fees related to the account and money in the account.
You will see joint checking accounts in many situations. For example, when a parent shares an account with their minor child to help them with their finances, or when married couples share an account to manage household expenses.
A checking account is used to address several needs. Whether you’re a student, newly married, or working to rebuild your banking history, you can find a checking account for you.
Each account offers benefits and features to fit your lifestyle and make managing your finances easier.
At Partners Financial Federal Credit Union, we offer several checking accounts to help you best manage your finances.
Find helpful resources on checking accounts and money management in these articles: