Checking Accounts Explained

One of the most widely used financial account types for businesses and individuals, checking accounts are vital tools in everyday financial management and security. They provide a safe place to keep your money while simplifying tasks like shopping, saving, and monitoring your funds. But are you using the best account for your needs, and are you getting the most you can out of it?

In observance of Financial Literacy Month, we’ll show you the ins and outs of checking accounts—what they offer, the different types, and how to pick and open one that fits your life. 

Why Do I Need a Checking Account?

Checking accounts are more than just a secure way to store your money. They come with convenient, powerful features that elevate your experience, like automated bill payments and the ability to send and receive money from your phone or other device.

Though exact features can vary by account and institution, checking accounts typically offer:

• Fast, easy access to your funds as needed
• Numerous payment options, including debit cards, paper checks, or digital payment methods
• Convenient local branches and ATM locations
• In-person, online, and mobile banking tools that let you bank your way
• Automated bill pay options that help you avoid late fees
• Automatic transfers between accounts for easy saving or management
• Robust fraud protection
• Customizable account alerts to notify you of suspicious transactions, low balances, and more
• Account statements and transaction histories available online or in mobile applications
• Direct deposit of your salary into your account for less hassle

What Varieties of Checking Accounts Exist?

Several types of checking accounts are tailored toward different financial needs and demographics. Though checking account options may vary by institution, the most common types include:

• Personal checking, which is an umbrella term for checking accounts designed for individuals
• Business checking, which is an umbrella term for checking accounts designed for businesses
• Youth checking, which can be opened for a minor by a legal guardian to impart financial literacy and smart money habits early on
• Joint checking, which can be opened by two or more people (such as a couple) who are all equally responsible for the account, including the payment of any fees or penalties

Checking accounts allowing eligible balances to earn dividends, such as Suffolk Credit Union’s Momentum Checking account, also exist. We also offer tiered business checking accounts that allow members to choose the option best suited to their preferences.

How Do I Open a Checking Account?

Though account type and institution may affect the process, you can usually open a checking account fairly quickly in a few short steps:

• Gather all essential information, including an official picture ID like a driver’s license, your Social Security number, proof of address, current and previous employment information, and your contact information.
• Complete the online or paper application form.
• Make your first deposit via cash, check, or electronic transfer to finish opening your checking account, which may be subject to a minimum opening deposit or balance requirement (often $5 or more).

At Suffolk CU, personal checking accounts can be opened online or in person, and business checking accounts can be opened in-branch.

How Should I Set Up My Checking Account?

Maximize your new account’s functionality, convenience, and potential by customizing it to your needs and preferences. Common and popular account features include:

• Paperless billing and statements to be more convenient and eco-friendly
• Direct deposit of your salary for prompt access to your money
• Automatic bill payments and account transfers
• Account alerts to improve security and/or help you monitor your spending

If you’re switching to a new checking account from another account, ensure your previous account has enough funds to cover anticipated or scheduled withdrawals and bill payments until you’ve updated automated transaction payment methods with your new account information. You can close your old account once your new checking account and automated transactions are established.

What Are the Pros and Cons of Debit Cards?

Many checking accounts come with a free debit card, allowing you to make transactions from your bank account with a swipe, insert, or tap. You can even use your debit card for online shopping by entering your card information—but always be sure you trust the website and your internet connection first.

Benefits of debit cards include:

• Widely accepted by most vendors and establishments
• Less risk of losing your money than carrying cash
• Reduced risk of fraud with advanced technology like EMV chips, which encode payment information and create a unique code for every transaction, reducing the risk of fraud

Disadvantages may include:

• Easier to overspend and be less mindful of your purchases
• Potential for non-sufficient funds fees or penalties
• Usually cannot help you build credit
• Lack of purchase protections offered by credit cards, such as refunds for damaged or faulty purchases

What Alerts Can I Enable for My Checking Account?

Checking accounts typically have alerts for certain transactions or activity types. Alerts may be optional or automatic and may be sent by phone, email, text message, or push notification on your mobile device. Common alerts include:

• Low balance notifications for when your account balance falls below a specified limit
• High balance notifications to remind you to move funds to savings or investment accounts when your balance goes above a specified limit
• Single and large transaction notifications that alert you when a transaction is over a specified limit

You may also be able to customize your protection by enabling alerts for each debit card transaction, foreign transactions, direct deposits, upcoming scheduled payments, and changes to your profile or contact information.

What Fees Should I Know About?

Understanding possible fees is crucial in selecting a checking account that aligns with your financial scenario and habits. They differ between accounts and institutions but may include:

• Monthly maintenance fee, which is a small monthly charge that helps cover operational costs of maintaining the account
• ATM fee, which is charged when you use an ATM outside of your institution’s network
• Non-sufficient funds fee, which is charged when you attempt to make a transaction that’s more than your available balance

Some accounts or financial institutions may charge fees for services like ordering checks, conducting wire transfers, account inactivity, and early account closure. With a little strategy, you may be able to avoid some fees, such as by using in-network ATMs or setting up direct deposit to have the monthly maintenance fee waived.

Empowering Your Money Management!

With the right checking account, you can enjoy more secure, streamlined financial management and a range of valuable services and resources from your credit union. Make sure you understand an account’s terms, eligibility requirements, features, benefits, and fees before committing to it, and you’ll be well on your way toward enhanced financial wellness.

At Suffolk CU, we’re passionate about making it real easy for our members to optimize their financial health. Our Momentum Checking account for individuals offers no minimum balance requirement, no monthly fees, access to 71,000+ ATMs nationwide, and the opportunity for qualifying balances to earn monthly dividends. For businesses, our Basic and Deluxe Checking account options both feature no monthly fees, unlimited check writing, overdraft protection included, and so much more. Open a Momentum Checking account online, or visit a local branch to open a business checking account.