A Checking Account - Why It's Better Than Cash or Credit Cards

Checking accounts are a great tool for money management allowing you lots of flexibility. They also offer security and replace the need to carry or store large amounts of cash. Unlike cash, if your checks are lost or stolen it’s inconvenient but you can put a hold on the account and prevent too much damage.

Practically every bank now offers some type of checking account to their customers. While the terms and features of these accounts vary greatly from bank to bank, the basic idea is the same. It’s a secure place to store your money after you receive it and before you spend it.

Unlike other accounts, checking accounts are very liquid meaning you have easy access to your money. Most banks offer ATM cards and debit cards that allow you to get cash back at checkouts.

Write a Check

One of my favorite things about checking accounts is, unlike credit cards, they allow you to pay for purchases and bills upfront.

You get in the habit of responsible spending by ensuring you have the money before it’s spent. This is one the single most important things you can do to make sure you stay out of debt or don’t get in deeper.

Staying out of debt is worth the small amount of trouble to make sure you have the funds in your account before writing a check. You can easily do this by remembering to record all transactions in your check register.

It’s necessary to stay on top of this because you will be charged fees from both your bank and the company you wrote the check to if it bounces.

One way to avoid this is overdraft protection. This is basically a line of credit that kicks in if you go over the amount you have in your account. You will have to apply for this like a loan and your credit will be a factor. Also this money usually has to be paid back quickly. So it’s best to just keep up with how much goes in and comes out of your account.

Each month you should receive a statement in the mail that lists all debits and credits to your account. It’s very important to compare this statement to your check register and make sure it matches. This is called reconciling. That way if you forget to record a purchase, you can do it at that time.

Most banks also offer the option to check account balances and transactions online. Some even offer 24-hour automated phone service that can give you account information anytime. This is a good thing if you want to use a debit card instead of carrying around a checkbook. Simply check and record the transactions from your computer or phone.

Another convenient option offered by most banks today is internet banking. This allows you to pay bills and transfer money online. Most utilities, phone companies and other service providers allow you to set up your payments to be automatically deducted from your checking account each month. They will send a statement or email confirming this and you should record it in your check register as soon as you receive it.

Online banking is very convenient, saves a lot of time and helps you avoid additional fees from late payments. You have to set up each bill initially but once it’s set up it basically runs on auto-pilot. This is good if your account limits the amount of checks you can write each month.

Talk with your banker and have them explain the different types of checking accounts they offer. Find out if they charge service fees for low balances or a surcharge for ATM usage. Ask it they offer debit cards and is there is a fee for that.

Also, check to see if there is a limit on the amount of checks you can write each month. Some banks have limits on free checking accounts and there is a fee charged if you go over. Tell your banker how you plan to use the account and they should be able to help you make the right choice.

When ordering your checks for the first time, it's a good idea to list your legal name (no nicknames), your mailing address, phone number and drivers license number on the check. This will save a lot of time at the check-out because most retailers require this information.

A good supplement to your checking account is a savings account. These are usually less flexible but pay interest and are a good place to save and grow any extra money you may have.

From Checking Account to Banking Information