What is the use of a checking account as part of a comprehensive financial solution plan? The answer is quite simple: it's a method of keeping highly liquid cash assets in a state ideal for frequent deposits and withdrawals. As the name implies, it is typically a type of bank account that is designed to be set up with a physical checkbook. While physical checkbooks have become somewhat antiquated in today's electronic economy, it still serves a very functional purpose (albeit in a more electronic sense). The ability to not only easily deposit, as well as withdraw, funds upon demand is essential to every person's day-to-day needs. Checking accounts can be used to do everything from paying rent or monthly mortgage payment to buying items from an online retailer.
Checking accounts are also highly useful as they typically come with an automated teller machine (ATM) card, which usually also doubles as a debit based credit card (whose purchases cannot exceed the funds in the checking account). With the ubiquity of point of sale (POS) systems that accept such cars, as well as ATM's, it makes it extremely easy for one to access (and use) their funds effectively and conveniently. There might be fees, depending on the situation; however, users will typically be made aware of any such fees prior to completing a transaction. For example, it is customary for banks to charge an out-of-network fee of a few dollars for withdrawing funds from a non-bank ATM.
Checking accounts differ from other common bank accounts, such as savings account and/or brokerage accounts. Savings accounts, as the name implies, are primarily intended for depositing money into the account, or "saving" money. And while it can sometimes be possible to withdraw funds in the same manner as a checking account, they typically have a periodic limit on how many withdrawals can be made without additional fees (for example, only ten withdrawals per month, and then a fee of $1 dollar for every additional withdrawal afterward). Brokerage accounts are typically used for the holding and trading of common stocks, mutual funds, bonds, exchange-traded funds (ETFs), etc. As such, brokerage accounts are typically not liquid assets, but ones that must be sold in order to return to a cash state. Many of the aforementioned brokerage assets also typically have federally mandated trade market day settlement periods of anywhere from one to several market days. Since a checking account's assets are held in a liquid cash position, there is no concern with having to liquidate assets in order to access or withdraw said assets.
Contact a bank in your area to learn more about checking accounts.Share