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Should I Get a Checking Account? Some Advantages and Disadvantages
By Robbie T. James
By now, you have probably noticed that the majority of adults (and even many teens and young adults) have a checking account to call their own. Why are these accounts so popular? You may be wondering, "Should I get a checking account?" Well, that all depends upon your own personal needs and sensitivities. There are some distinct advantages and disadvantages to having an account of your own.
But first, it is important to understand exactly what a checking account is, and isn't. The checking account - sometimes called a transactional account - was designed for the purpose of helping the bank customer to manage day-to-day cash flow. That is, the account makes it easier to receive and pay out cash to and from your bank account on an ongoing basis.
You can write a check against the money in your account to pay for goods or services rendered. In addition, most people these days who have checking accounts also have ATM cards, debit cards, and credit cards (or all three functions rolled into a single card) attached to their accounts. That means that, if you have a checking account and you need to withdraw cash or make a debit or credit purchase, the money is deducted out of that account at that time.
By contrast, a savings account is designed for saving your money longer term. Having a savings account means having a place to keep your cash so that you do not need to keep it under the mattress or hidden in your freezer. Savings accounts, however, are not designed for the account owner to use to make and receive frequent payments. That is the realm of the checking account!
Advantages Of Having A Checking Account:
Here are the main advantages of having your own account:
* You can pay bills or buy goods and services without relying on carrying around cash or putting charges on an interest-charging credit card
* Allows you to conduct online banking, including issuing payments and making balance transfers
* Lets you receive direct deposits from your employer, the federal government, or others who owe you money
Disadvantages Of Having A Checking Account:
While this is all good stuff, there are some disadvantages to having an account, including:
* Unlike with a savings account or a money market account, you cannot earn interest on your money when it is in a checking account
* You may have to pay per-check or monthly fees in order to keep the account open
* You could find yourself in a situation whereby you have written large checks or made debit purchases that end up overdrawing your account, resulting in an overdraft fee being charged; these fees can be as high as $35/instance, and you could easily incur 2-3 such charges in a day
* You may have trouble qualifying for a checking account; this can happen if your name has been reported to something called ChexSystems, which is a central database that banks use to share information about customers who have made some mistakes in their past.
If you are still interested in getting an account despite the disadvantages, you can find banks that offer checking accounts that could still meet your needs. For example, some banks - called second chance checking banks - will promise never to refer to ChexSystems when considering your application for a new checking account. Meanwhile, other banks will never charge you an overdraft fee. Be sure to shop around to find the right bank for you.
About the Author: Find out how to get a guaranteed checking account at: Checking Accounts For Everybody.
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