A checking account is where you put the money you earn, and where you take out the money you need. You can access it through debit cards, ATMs, mobile devices, and personal checks. Most accounts allow an unlimited number of monthly transactions.
There are many types of checking accounts to fit a wide variety of financial needs. If you've got the travel bug and like to pay in cash, then opt for an account connected to an extensive ATM network. If you often push your balance down to zero, consider an account with built-in reminders and overdraft protections. If you need the in-person treatment, look for a legacy bank or credit union with many branch locations.
Here are the basic types of checking accounts you can expect to find:
- Personal checking account. This is the standard place to put cash where it will be readily available at a moment’s notice. Your money will typically be accessible via a debit card, checks, your mobile device, at ATMs, or at a physical branch location.
- Online-only checking account. Similar to a standard personal checking account, but only available online. Because online banks don’t have branch locations, they often pass those savings on to customers in the form of lower fees and more favorable interest rates than your typical brick-and-mortar bank.
- Joint checking account. This account allows for two or more individuals to share access to a pool of money. Often used by couples, parents and children, adults and elderly parents, roommates, and business partners, joint accounts can be a useful way to share financial responsibility, or to help a friend or relative who needs assistance managing their money.
- Rewards checking account. Some accounts provide perks for your loyalty, such as cash back on debit purchases, reimbursement for ATM fees, airline miles, or a one-time signup bonus.
- Challenger bank account. If you’re looking to get in on the cutting edge of checking, you may want to consider a challenger account. Typically run by financial startups (also known as “fintech” companies), these accounts usually offer low fees (or no fees) and feature perks like making your paycheck available up to two days early when you use direct deposit.
- Interest-bearing checking account. Some accounts pay interest on your money and may offer lower fees. But there are often requirements, including maintaining a minimum balance and/or using your debit card a certain number of times per month.
- Student checking account. Students often need low-fee, easily accessible accounts, whether it’s for an allowance in high school, or to help pay for college.
There are other types of accounts beyond checking that are also worth considering:
- Savings account. Somewhat similar to a checking account, it’s where you put money that you don’t immediately need. But these funds are still usually accessible at a moment’s notice in case of emergency.
- Money market account. These accounts usually offer higher interest rates but may also require a higher minimum balance. They share some features with checking accounts, such as debit cards or checks. For example, the MyLife Money Market account typically has a higher rate than online-only savings rates.
- Cash management account (CMA). These technically aren’t bank accounts but are places to store cash offered by investment firms or other financial services companies, such as robo-advisers. They often provide higher interest rates than a legacy bank account.
- Certificate of deposit (CD). A bank holds your money for a set term—anywhere from a few months to five years—and provides a generous interest rate in return. The longer you park your money with that bank, the higher the rate.
Now that we’ve laid out a basic roadmap of your checking account options, we’ll dive into which one is best for your particular stage of life.