Checking accounts can be essential for managing your expenses and tracking your money efficiently. The main function of this account is to store deposits and assist you to make payments, primarily via electronic transactions and debit cards.
You can opt for various types of personal or business checking accounts available in banks and credit unions, but you need to be well informed about them before deciding on the type of account you need. Here’s a list of the various types of checking accounts:
- Online checking account
Banks provide checking accounts that can be completely operated online, and they also benefit from these. It takes advantage of the lower maintenance cost required for these type of accounts. Not only does this cut down on the bank’s expense, but it also allows them to provide its customers with credit lines and loans. These credit lines and loans help the bank to earn revenue in the form of interest.
- Business checking account
The primary benefit of a business checking account is that it differentiates between your business and personal finances. Furthermore, these can assist you in keeping an accurate record of your business transactions, and they can help you in filing your business taxes on time and accurately.
While many banks charge a fee, you can also open a free business checking account. These are available on two conditions: either you have to pay an opening deposit amount, or you have to maintain a minimum balance in the account at all times. Additionally, this type of an account may have some restrictions related to transactions, which makes it necessary to educate yourself about this type of account before choosing to open one.
- Interest-bearing checking account
The main benefit of an interest-bearing checking account is the opportunity to earn. Opening an interest-bearing checking account with a bank can earn you a fixed percentage of interest, which depends on how much money you have in your account.
There are certain criteria that you might need to meet to qualify for these accounts, and these criteria can include requirements in debit card usage, direct deposits, and maintaining a minimum balance.
- Second-chance checking account
This is probably the most aptly named type as it offers a second chance to people who do not meet the eligibility criteria for checking accounts. This ineligibility can be the result of a wide range of factors, which may be bad banking history, bad credit, and negative items detected by ChexSystems. ChexSystems is a consumer credit agency that verifies whether a consumer has been involved in misconduct or fraudulent activities.
The fees for this type of an account may be higher than the regular checking accounts, but you may have the chance to upgrade to a standard checking account if you clear evaluation. This evaluation ensures that you have established a decent banking history.