Whether you’re shopping for a new bank or you’re new in the game of adulting, you’re likely to start with a checking account. Of the multiple types of accounts that are available to consumers, checking accounts are the most common.
A checking account is an account that holds your money and allows you to deposit, withdraw, and spend your hard-earned cash as often as you want. Also known as “demand accounts” or “transactional accounts,” these current accounts can be accessed using an ATM (automated teller machine), electronic debit, checks, and more.
Checking Account Terminology for Better Understanding
Before we continue, here are some terms you’ll need to know as per HelpWithMyBank.gov:
- Overdraft = “the amount of money withdrawn from a bank account is greater than the amount available in the account.”
- Interest = “Interest is the cost of using money.” You pay interest when you borrow money, and you earn interest when you lend or deposit funds into your bank account.
- Credit union = “a non-profit-making money cooperative whose members can borrow from pooled deposits at low-interest rates.”
- APY or Annual Percentage Yield= The amount that your account will earn in a year based on its balance.
What are the Basics of Checking Accounts?
- With a checking account, you receive a debit card, eliminating the need to carry cash.
- Checking accounts offer lower interest rates than a savings account as they’re more suited for day-to-day spending.
- While paper checks earned them their name, debit cards have overtaken the form of payment.
- Checking accounts allow for a direct deposit of your income.
- Unlike credit cards, paying with a checking account debit card will not cause you any debt. You need sufficient funds to make a purchase.
- A daily purchase limit will protect your funds in your checking account.
- You need to monitor your account to avoid overdraft (overspending your balance) and insufficient funds, which could cost you bank fees.
The 8 Best Checking Accounts for 2020
There are hundreds to choose from, but here are some top contenders for various reasons.
1. Capital One MONEY Checking Account
Equip your teenager with a first checking account at Capital One. Their MONEY Checking Account is fee-free with no minimum balance. On Capital One’s great App, parents and teens have shared access to track banking activity. While they explore the App, your teen can learn about saving with ‘Spendable’ and ‘Set Aside’ categories. They can choose how much money they want to spend or save.
2. Charles Schwab High Yield Investor Checking Account
If you’re often on the go and traveling the globe, then the Schwab Checking Card is for you. It offers unlimited ATM fee rebates, no service fee or account minimums, and no foreign transaction fees.
3. Discover Checking Account
Discover Checking Account ticks all the boxes for a no-fee checking account. No fees on insufficient funds, online bill pay, debit card replacement, account closure, and more. You’ll even get 1% cashback on $3,000 of debit card spending monthly.
4. Simple Checking
Simple Checking Account makes it easy to manage saving goals by combining a savings and checking account. With Simple, you get paid 1.40% APY, which is a lot higher than the other contenders. This account tops the charts as the best checking account for monthly budgeting. You’ll incur no fees and no account minimum.
5. Alliant Credit Union – High-Interest Checking
Voted the best credit union by Bankrate and Nerdwallet for 2020, Alliant has a High-interest Checking Account for you. Alliant has 80 000 surcharge-free ATMs, easy-to-use mobile banking, and they have no monthly account fees or minimum balance. Becoming an account holder is relatively easy as their requirements are narrow.
6. Radius Bank Rewards Checking
If you’re looking for a free checking account that will reward you with cashback and bonus’ then Radius Bank Rewards Checking is the way to go. You’ll receive 1% cashback on all online and debit card transactions, as well as bonus 0.5% cashback on select products throughout the year. For April through to the end of June 2020, cashback could be earned for health, food, entertainment, and charity-related expenses.
7. Axos Rewards Checking
“Low fees and higher interest mean more money in your pocket.” With the Axos Rewards Checking Account, you earn up to 1.25% APY while enjoying “digital tools for smarter money management,” such as online bill pay, free mobile deposits, and more. This is the best checking account for earning interest.
8. Chase Sapphire Checking
As one of the largest banks in the US, Chase bank offers the best checking account from a bank with branches. Their Chase Sapphire Checking Account is excellent for high earners and spenders. While they do have high fees, they also have great perks for the account holder.
Chase offers three checking accounts for you to choose from: the Chase Sapphire, Chase Premier Plus, and Chase Total Checking.
How do I Choose a Checking Account?
You want a checking account that will work for you and your earning, spending, and saving habits. Here are some things to consider before you sign on the dotted line. These are things that make a checking account great:
- No monthly service fee
- User-friendly access to manage your account – online banking should be something as simple as a few clicks, and if you can make a payment or bank transfer on your smartphone with your mobile App, then that’s even better.
- Free ATMs Access – you don’t want to be charged an ATM fee every time you withdraw cash. Consider a bank that offers a large map of available ATMs.
- Overdraft options – You have the option of overdraft protection or no overdraft at all.
- No minimum balance – A minimum balance requirement offers you no benefits as your money will be locked away, earning no interest. Choose a bank that has no minimum or low balance requirements.
Banking is a part of life that we all have to navigate. Your bank could make you want to rip your hair out, or it’s a pleasant association that makes managing your finances a breeze. When you choose your bank, you choose a (hopefully) lifelong relationship with minor mishaps. With the right mix of features, access, and minimal cost, you can find a checking account that suits your individual banking needs.
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