In today’s digital world, writing checks is becoming a rarity. There was a time when everyone paid their bills by check. But today, most of us only use checks to pay the landlord, a doctor’s office or a school organization. So it’s still worth knowing how to balance a checkbook. It’s also important to note how long it takes for checks to clear.
Despite this, many of us continue to hold checking accounts, mainly because of the other benefits they carry. It’s one of the 10 financial accounts everyone should have. Here’s what you need to understand about checking and why they are the most common type of bank account people have.
A checking account is like other bank accounts. The bank holds onto your money, promising to keep it safe until you need to use it. You can write checks from the balance and the recipient can cash the check or deposit it in their own bank account. It’s the most common type of account because the debit and ATM cards that come with checking accounts make them flexible, allowing you to pay many types of bills using the same pool of funds.
Most checking accounts don’t pay high interest. If they do, they sometimes require a minimum balance. People who make few monthly transactions will opt for basic checking, which charges few (if any) fees. In Illinois, Massachusetts, Minnesota, New Jersey, New York, Rhode Island and Vermont, the law requires banks to offer a basic checking service called a Lifeline account. This offers an affordable banking option for the poor and elderly, who often cannot receive Social Security checks without having a checking account.
Why Not Savings?
Most people choose checking accounts, even though they rarely write checks, because savings accounts make it harder to access their money. They don’t offer debit cards, often requiring users to transfer money to a checking account before they can access it.
Savings accounts often restrict the number of withdrawals you can make too, which makes it a poor choice for paying your bills. Because of this, most people prefer to keep a savings account to keep emergency funds while using a separate checking account for paying the bills.