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What is a Checking Account?
A checking account is a bank account into which you deposit funds (such as direct deposits of the pay from your job) that you can then use to pay bills, make purchases and carry out other tasks. They can be opened online or at a physical branch.
Upon opening a checking account, the customer typically receives a debit card. The customer can perform transactions with either one or by using numbers associated with the account, such as the debit card number, the routing number and account number.
Checking is just one of the accounts you may open at a bank. You may also have a savings account, where you accumulate money to cover an emergency such as a car repair, or a high-yield savings account for long-term savings. Savings accounts like these earn interest.
Some checking accounts also earn interest. Whether or not they do, money flows through almost daily, so it's important to keep track of the account balance.
How do checking accounts work?
Checking accounts work by allowing you to deposit and then spend money to pay for things. Today's checking accounts facilitate many of the electronic banking functions we have come to rely on, including:
- Direct deposit
- Mobile check deposit
- ATM cards for commercial transactions and bank deposits
- Wire transfers
Most checking accounts come with debit cards, which have taken over the functions of paper checks. A debit card enables the deposit or withdrawal of funds at any time at ATMs. You can also use a debit card to pay bills, get a haircut or have dinner at a restaurant, so there's no need to carry a lot of cash.
Modern checking accounts also enable mobile banking. You can, for example, use a smartphone to transfer money immediately between checking and savings accounts and send money to a friend using online payment services such as PayPal, Zelle and Venmo.
Benefits of a checking account
If you've never had a checking account, you may be wondering whether you really need one. The fact is that the advantages of having a checking account are many. Here are a few:
- Convenience for everyday purchases
A debit card facilitates everyday purchases, from groceries to a pack of gum, and lets you make a deposit or withdrawal at ATMs 24/7. Some banks may have a fee with out-of-network ATMs when withdrawing money - Direct deposit
Most employers today pay by direct deposit, usually into a checking account. Direct deposit is faster and more secure than paper checks—another benefit of a checking account - Easy tracking of expenses
It's important to keep an eye on cash flow when you're managing expenses. Using a debit card and checks to access funds in your checking account lets you immediately see where the money is going - Writing checks
When you're opening a checking account, you may receive a small supply of good old-fashioned paper checks, which can still come in handy. For example, when you go to set up direct deposit, an employer may ask for a voided check to ensure that the bank account information is valid. In addition, some landlords require checks for rent payments
- Checking balances
You can go online or use the bank's mobile app to check balances to try to avoid overdrafts - Overdraft protection
Occasionally, your account balance may fall into negative territory. Many banks offer overdraft protection that links the checking account to credit accounts or other personal bank accounts to avoid overdraft fees - ATM and mobile deposits
Deposit cash or checks any time at an ATM. Plus, many mobile banking apps let you deposit checks from your phone
Common types of checking accounts
Financial institutions have developed checking accounts with different features and benefits to meet a variety of consumer needs. Here's a look at four basic types:
Student checking account
Some banks offer student checking accounts for high school, college and even middle school students. These accounts feature low or no maintenance fees and no minimum balance requirements. It's a great way to start teaching a young person to be a responsible money manager. Typically, a young person must be 18 to open an account in their own name, but a parent or guardian can open a custodial account for a minor.
Regular or basic checking account
A regular checking account typically pays no interest and may charge a monthly maintenance fee. Free checking accounts may limit the number of withdrawals or transactions per month, and they may require a minimum balance or direct deposit to avoid fees.
Business checking account
On the surface, there's little difference between a personal checking account and a business checking account because they perform many of the same functions. But a business checking account is a must for a business established as a separate legal entity; it keeps business and personal funds from mingling and simplifies tax preparation.
Premium checking account
Premium checking accounts are for consumers who can maintain a higher minimum balance in exchange for avoiding maintenance fees. They may earn interest on the balance, rate discounts on loans, waived fees and safe-deposit box rental. If you slip below the minimum balance, you could get bumped down to regular or basic checking.
It's easy to set up a checking account. Most banks, including TD Bank, let you start a checking account online 24/7, or you can visit a banking center.
When looking for a checking account, ask for a fee schedule and compare costs, and make sure you're comfortable with a long-term relationship.
Checking accounts from TD Bank
An account loaded with perks
A checking account made for everyone
No checks and no overdraft fees or services
TD Business Simple CheckingSM
An ideal account with no minimum balance requirement
TD Business Convenience Checking Plus
The essential account features you need to run your business
TD Business Premier CheckingSM
Rewards for your business deposits, TD Bank relationship and more