Advertisement

How to Use a Checking Account 2023 (Step by Step)

How to Use a Checking Account – A checking account is a type of bank account that allows you to deposit and spend money easily and conveniently. It can be a useful tool for managing your personal finances, paying bills, and making purchases.

READ ALSO

Advertisement

How to Use a Checking Account (Step by Step)

You need to know how to use a checking account properly to avoid fees, overdrafts, and fraud. Here are some steps to follow:

1. Choose the right type of checking account for your needs

There are different types of checking accounts available at banks and credit unions. Some of the most common ones are:

Advertisement
  • Basic checking account: This is a simple account that lets you write checks and use a debit card to pay for goods and services. It usually has low or no monthly fees, but may require a minimum balance or a certain number of transactions per month.
  • Interest-bearing checking account: This is an account that pays you interest on your balance, usually at a low rate. It may have higher fees or balance requirements than a basic account, but it can help you earn some extra money on your deposits.
  • Joint checking account: This is an account that you share with another person, such as a spouse, partner, or family member. You both have access to the funds and can write checks and use debit cards. This can be convenient for managing household expenses, but you also need to trust the other person and communicate well about your spending habits.

Before opening a checking account, compare the features and fees of different accounts at different banks or credit unions. Choose the one that best suits your needs and budget.

2. Open a checking account and make your first deposit

To open a checking account, you need to visit the bank or credit union of your choice, either online or in person. You will need to provide some personal information, such as your name, address, Social Security number, and photo ID. You will also need to sign a signature card that the bank will use to verify your identity when you write checks.

You will also need to make your first deposit into your checking account. You can do this by using cash, a check, direct deposit, or an electronic transfer from another account. The amount of money you need to deposit may vary depending on the type of account you choose.

Once your account is opened, you will receive temporary checks and a debit card that you can use until your permanent ones arrive in the mail. You will also receive your checking account number and your bank’s routing number, which are important for making deposits and withdrawals.

Advertisement

3. Write checks and use debit cards to make payments

One of the main benefits of having a checking account is that you can use it to pay for goods and services without carrying cash. You can do this by writing checks or using debit cards.

A check is a written order that instructs your bank to pay money from your account to another person or entity. To write a check, you need to fill out the following information:

  • The date
  • The name of the payee (the person or entity you are paying)
  • The amount in numbers
  • The amount in words
  • Your signature
  • A memo (optional)

You also need to record the check number, date, payee, and amount in your check register, which is a booklet that helps you keep track of your transactions.

A debit card is a plastic card that works like cash. It is linked to your checking account and allows you to withdraw money from ATMs or make purchases at stores or online. To use a debit card, you need to enter your personal identification number (PIN) or sign a receipt.

You also need to record the date, amount, and description of each transaction in your check register.

4. Make withdrawals and deposits using ATMs or tellers

Another way to access your money in your checking account is by making withdrawals and deposits using ATMs or tellers.

An ATM is an automated machine that allows you to perform basic banking transactions using your debit card and PIN. You can use an ATM to withdraw cash from your account, deposit cash or checks into your account, check your balance or transfer money between accounts.

A teller is a bank employee who can assist you with various banking services at a branch. You can use a teller to withdraw cash from your account, deposit cash or checks into your account, order checks or debit cards, cash checks or money orders, or get cashier’s checks or money orders.

To make a withdrawal or deposit using an ATM or a teller, you need to fill out a slip that indicates the amount and type of transaction. You also need to record the transaction in your check register.

5. Use online or mobile banking to manage your account

Online or mobile banking is a convenient way to access and manage your checking account from anywhere using a computer, smartphone, or tablet. You can use online or mobile banking to:

  • Check your balance and transactions
  • Pay bills or send money to others
  • Transfer money between accounts
  • Set up alerts or notifications
  • Report lost or stolen cards or checks
  • Order checks or debit cards
  • Apply for loans or credit cards

To use online or mobile banking, you need to register for an account on your bank’s website or app. You will need to create a username and password and provide some security information. You will also need to have access to the internet and a device that supports online or mobile banking.

6. Avoid fees and overdrafts by maintaining a minimum balance and monitoring your account

One of the drawbacks of having a checking account is that you may incur fees or overdrafts if you don’t use it properly. Fees are charges that your bank may impose for certain services or transactions, such as:

  • Monthly maintenance fees
  • ATM fees
  • Check fees
  • Debit card fees
  • Wire transfer fees
  • Foreign transaction fees
  • Stop payment fees
  • Returned item fees

Overdrafts are situations where you spend more money than you have in your account, resulting in a negative balance. Overdrafts can happen when you write a check, use a debit card, make an automatic payment, or withdraw cash that exceeds your available funds. Overdrafts can cause you to pay:

  • Overdraft fees
  • Insufficient funds fees
  • Interest charges
  • Returned item fees

To avoid fees and overdrafts, you need to maintain a minimum balance in your account and monitor your account regularly. A minimum balance is the amount of money you need to keep in your account to avoid monthly maintenance fees or qualify for interest. You can find out the minimum balance requirement for your account by checking your account agreement or asking your bank.

To monitor your account, you need to check your balance and transactions frequently using online or mobile banking, ATMs, tellers, or monthly statements. You also need to reconcile your account by comparing your check register with your bank records and making sure they match. This can help you catch any errors or discrepancies in your account.

7. Protect your account from fraud and identity theft by following security tips

Another risk of having a checking account is that you may become a victim of fraud or identity theft if someone steals your personal or financial information and uses it without your permission. Fraud or identity theft can cause you to lose money, damage your credit, or face legal problems.

To protect your account from fraud and identity theft, you need to follow some security tips, such as:

  • Keep your checks, debit cards, PINs, passwords, and check registers in a safe place.
  • Don’t share your personal or financial information with anyone you don’t trust.
  • Don’t write checks or use debit cards for transactions that seem suspicious or too good to be true.
  • Review your statements and transactions regularly and report any unauthorized or fraudulent activity to your bank immediately.
  • Shred any documents that contain your personal or financial information before disposing of them.
  • Use secure websites and networks when accessing online or mobile banking.
  • Update your contact information and security settings on your online or mobile banking account.

A checking account can be a valuable tool for managing your money, but it also comes with some responsibilities and risks. By following these steps, you can use a checking account effectively and safely.

Frequently Asked Questions (F&Qs)

How do you access your money in a checking account?

There are many ways to access your money in a checking account. Here are some of the most common methods:

  • ATM: You can use your debit card to withdraw cash from an ATM. This is a convenient way to access your money, but be aware that there may be fees associated with ATM withdrawals.
  • Debit card: You can use your debit card to make purchases at stores and online. This is a convenient way to pay for things, but be aware that you may be charged overdraft fees if you spend more money than you have in your account.
  • Check: You can write a check to pay for goods or services. This is a traditional way to pay for things, but it can be inconvenient if you need cash quickly.
  • Direct deposit: You can set up direct deposit so that your paycheck or other payments are automatically deposited into your checking account. This is a convenient way to receive your money, and it can help you avoid overdraft fees.
  • Online banking: You can access your checking account online and make transfers, pay bills, and check your balance. This is a convenient way to manage your money, but it’s important to be aware of the security risks associated with online banking.
  • Mobile banking: You can access your checking account through your mobile phone and make transfers, pay bills, and check your balance. This is a convenient way to manage your money, and it’s just as secure as online banking.

How much money do you need to have in your checking account?

A good rule of thumb is to have one to two months’ worth of living expenses in your checking account. This will give you a cushion in case of unexpected expenses or if you have a delay in receiving your paycheck.

Advertisement