What Is a Checking Account Used For?
Learn about checking account uses, capabilities, and benefits.
A checking account is used to safely hold your money and conduct day-to-day financial transactions, such as depositing paychecks and cash, withdrawing money to pay bills, making purchases, and transferring money to others. A checking account can also help you manage your finances and stay on budget. It can even safeguard your money because the account is guaranteed by the U.S. government against losses up to $250,000.
How Does a Checking Account Work?
When you open a checking account at a bank, you will receive a supply of paper checks, which you can use to pay bills or transfer money from your account to a business or individual. When the paper check is cashed, money is withdrawn from your account for the check amount.
Many people, however, prefer to pay bills electronically, such as using Fifth Third’s online and mobile banking solutions. If you have recurring bills, you can choose to have payments automatically deducted from your checking account. Some companies or institutions charge processing fees when you pay a bill using a credit card; making a payment from your checking account typically avoids those extra costs.
A checking account can be linked to a debit card; funds will automatically be withdrawn from your checking account when you use a debit card to make purchases in stores or online. Unlike credit cards, debit cards only allow you to spend the amount in your account.
By adding the convenience of direct deposit, you can have immediate access to your funds without waiting for a paper check to clear. Friends and family can also immediately transfer money from their checking accounts to yours. And, should you receive a paper check, you can use mobile check deposit to photograph the check and deposit it in your account without having to visit a bank or ATM. A debit or ATM card allows you to deposit checks or cash at an ATM machine and get cash when you need it.
Another attraction of a checking account is the safety of your money. By opening a checking account that is insured by the U.S. government’s Federal Deposit Insurance Corp., you have the security of knowing that your money is protected against losses up to $250,000.
Different Types of Checking Accounts
Individuals’ requirements for a checking account vary, and there are different types of checking accounts to suit those needs:
- Traditional checking accounts are for those who want to write checks, pay bills online, use mobile banking tools, and make purchases with a debit card. A bank may require a minimum deposit to open a standard checking account and it may charge you a maintenance fee if your balance drops below a certain amount.
- Interest-bearing checking accounts pay interest on the balance you keep, but the rate will be lower than what you can earn in a savings account or money market account—vehicles that grow your money for longer-term financial goals. To qualify for interest payments, you may need to maintain a certain balance or conduct a specific number of transactions monthly.
- Free checking accounts, such as Fifth Third Momentum® Checking, have no monthly fee. Fifth Third Momentum® Checking has all the advantages of digital banking combined with the security of a bank and the support needed to reach your financial goals.
- Express Banking is for those who have had a rocky financial past and are looking to improve their financial foundation. It comes with built-in account safeguards to help you manage your money better.
- Student checking accounts have minimal or no fees, but you need to be younger than 25 to qualify.
Opening a checking account helps to provide you financial flexibility. From online banking to direct deposit and paying bills, the benefits of having a checking account are numerous.
Looking to open a checking account? Find out which Fifth Third account is best for you.