Checking accounts: advantages & disadvantages

Looking for a convenient place to keep your money in between use that’s not the pocket of your jeans that winds up in a wad after a tango with the washer?

A checking account might be just what you’re looking for. It’s a bank account used for everyday deposits and withdrawals—that means putting money into your account, taking it out or using your debit card in the place of cash.1

There are many benefits of a checking account, from easy access to your cash to direct deposit of your paycheck. Like with anything, there are checking account pros and cons, but let’s start with the advantages.

Advantages of checking accounts

If you're considering opening a bank account, there are lots of advantages to having a checking account.  

  • Earn interest: Some checking accounts earn interest, which means your money can grow even when it’s just sitting in the account.2
  • FDIC insurance: If you’ve been keeping your money in jars or under your mattress, you may be interested in the security of a checking account. Most checking accounts have FDIC insurance and are covered up to the allowable limits.3
  • Easy access: Checking accounts let you access your money in a number of ways. You can typically spend or withdraw money by visiting a bank, using your debit card at an ATM, writing a check or making an online transfer.
  • Debit card: Most checking accounts come with a debit card, so instead of paying with cash, you can easily tap or insert your card into a card reader at checkout to pay directly with the money in your account. You can also pay online with your debit card by filling out the requested information, like your name and card number.
  • Direct deposit: You can set up direct deposit into your checking account right from your employer.4 No more risk of losing paper checks in the mail. Your paycheck can be deposited into your checking account automatically on payday, which might be faster than getting it via mail, too.
  • Get paid early: Some banks even offer early direct deposit, where you can get your paycheck up to 2 days sooner—so you can pay bills earlier and buy the things you need.
  • Track spending: With a checking account, there is a record of your deposits and spending, so you can see where your money is coming from and where it’s going. Plus, some checking accounts let you lock your debit card if it's ever lost or stolen—helping to prevent unauthorized use.

Disadvantages of checking accounts

While checking accounts are full of benefits, they have a few shortcomings to be aware of, too. Keep in mind that checking accounts vary from bank to bank, so be sure to look into what features come with yours.

  • No interest: While some checking accounts earn interest, most don’t. And the checking accounts that do earn interest typically have a lower interest rate than savings accounts. This is because a checking account is typically used like cash and isn’t intended for your money to sit still, whereas a savings account is more typically used for long-term savings that won’t be touched as often.
  • Fees: Another checking account disadvantage is that sometimes checking accounts have monthly fees. That means paying money to use your own money. The good news is that there are some free checking accounts that don't have monthly fees, which means more of your money stays yours, so be sure to check when you're choosing your account.
  • Minimums: Some banks require you to keep a minimum balance in your checking account at all times. If you don’t, there might be a fee you have to pay. But remember, not all checking accounts are created equal, so if you’re worried about maintaining a minimum balance, look for a checking account that doesn’t have one.

Different types of checking accounts

If you’re tired of keeping track of cash (and tangoing with soggy dollars in the washing machine), a checking account might be the right choice for you. Check out these different types of checking accounts.

  • Traditional checking accounts: A traditional checking account typically offers checks, a debit card and ATM access. There’s also usually a physical bank location. There may or may not be fees, so be sure to check.
  • Online checking accounts: Online checking accounts provide services digitally. That means they may not have any physical locations for you to go to, but it also means that you can bank from wherever you are, online or on your phone.
  • Joint checking accounts: Joint checking accounts have more than one account holder who can access the cash. This can be a good solution for married couples or college students and their parents. Another thing to keep in mind: Adding a joint account holder could increase the amount of FDIC insurance for the account.
  • Teen and kid checking accounts: Some banks offer checking accounts made specifically for teens and children.5 They might have extra budgeting features or safety features, like the ability to set up savings goals and transaction text alerts for parents, that make them ideal for a first step into managing finances. These accounts typically require a parent or guardian to be a joint account holder.
  • Business checking accounts: If you run a business, this could be the checking account for you. Business checking accounts make it easier for you to keep your personal money separate from your business finances.

Moving your money into a bank account is a lot to think about. And choosing the right bank account for your needs is a personal choice. Consider these checking account advantages and disadvantages, as well as the features you’re looking for in a new bank account. If you’re interested in easy access to your everyday cash, a checking account might be the way to go.

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