What Is a Checking Account?
In plain English
A checking account is a deposit account at a bank or credit union designed for frequent transactions. It allows you to deposit and withdraw money, write checks, use a debit card, set up direct deposit, and pay bills electronically. Most checking accounts offer unlimited transactions with little or no interest earned on the balance.
How Does a Checking Account Work?
You deposit money into the account and access it through debit cards, checks, ACH transfers, or ATM withdrawals. Funds are available immediately for transactions. Most accounts come with online and mobile banking access. Unlike savings accounts, checking accounts typically have no limit on the number of monthly transactions you can make.
What Fees Should You Watch for with Checking Accounts?
Common fees include monthly maintenance fees (often waived with direct deposit or minimum balance), overdraft fees when you spend more than your balance, out-of-network ATM fees, and wire transfer fees. Many online banks offer fee-free checking accounts. It's generally wise to read the fee schedule before opening an account to avoid surprises.
How Do You Choose the Best Checking Account?
Consider monthly fees and how to avoid them, ATM network size, overdraft policies, mobile banking features, and whether you need branch access. Online-only banks often have lower fees and higher features. If you carry a balance, look for interest-bearing checking. If you travel internationally, look for accounts that waive foreign transaction fees.
Frequently asked questions
Is money in a checking account insured?
Yes. Checking accounts at FDIC-insured banks are protected up to $250,000 per depositor, per bank. Credit union accounts are similarly insured through the NCUA.
Can I have more than one checking account?
Yes. Many people use multiple checking accounts to organize spending — for example, one for bills and one for discretionary spending. There is no legal limit on the number of accounts you can hold.
Keep exploring
Related terms
Savings Account
A savings account is a deposit account that earns interest on your balance while keeping your money accessible for withdrawals.
Direct Deposit
Direct deposit is an electronic payment method that transfers funds — like your paycheck — directly into your bank account on payday.
Overdraft
An overdraft occurs when you spend more money than is available in your checking account, resulting in a negative balance and potentially a fee from your bank.