What is a checking account?

Checking accounts, along with savings accounts, are probably the most common types of bank accounts people have.

At first glance, checking accounts actually resemble savings accounts. They allow you to put money safely in a bank and access it whenever you want. The money in checking accounts is also insured up to $100,000, just like money in a savings account.

However, checking accounts come with a few perks that savings accounts do not.


First, they come with paper checks that you can write to pay people. Okay, so checks are certainly not used as much as they once were. When was the last time you saw someone pay with a check at the supermarket? But they are still an acceptable form of payment for most things you might want to buy. They are also useful for making big purchases when you don’t have or cannot use a credit card. Every landlord I’ve ever had has required a paper check payment for the first month’s rent and security deposit.

The second perk of a checking account is a check card, or debit card. This looks like a credit card, but will usually say “Debit” on it somewhere. This card is connected to your checking account, so whenever you use it to buy something, that money comes directly out of your checking account. This gives you the convenience of a credit card without the danger of spending way more than you have.

Two accounts?

So why would you have a savings account and a checking account? Well, one drawback of checking accounts is that they often do not pay interest the way savings accounts do. This has been changing over the last few years, but the interest rates are ridiculously tiny (as of this writing, Bank of America’s checking account interest rate is 0.01% — that’s one cent for every $100 in the account!), and you often must deposit a minimum amount to qualify to receive interest.  

The other drawback to checking accounts is how easy it is to get the money out of them. I can hear you thinking: Hold on. Isn’t that a good thing?

Yes, it is good…unless you’re trying to save money and you tend to be a spender. The fact that savings accounts make you put a bit more effort into getting your money out can help stop you from going on spending sprees, but that shiny debit card in your wallet is just begging to be whipped out every time you find an awesome outfit on sale.


That being said, you’re going to need to build up some self control, and a debit card is often a great way to practice using a card responsibly before you get a credit card.

Your choice

In the end, the choice whether to have a savings account, a checking account, or both is up to you. A balanced approach might be to put most of your money in savings, and leave only what you’re willing to spend in the checking account. Having a little fun money never hurts, just don’t go crazy.

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