Checking Accounts 101

Checks are a written order that represents cash. It allows you to purchase merchandise and pay your bills with a piece of paper instead of cash at hand. There are a few different types of checking accounts. Credit union checking accounts or Share Draft accounts as they are also called, are equivalent to a cash and works the same way as a regular checking account.

How Do Checks Work?

Checks work in a very simple way. Once you open up a checking account at a local bank of your choice, they will give you a check book. When you are ready to pay for merchandise or pay a bill, you simply write out the information on the front of the check with the amount and give it to the cashier.

Be sure to check if the store accepts check first. Once the check is given to the cashier, the store sends it to their bank and it is deposited. The bank then sends it to the Federal Reserve Bank and they cash the check and pull the funds from your bank account.

Choosing a Checking Account

When you are choosing a checking account you should check various banks to find exactly what you are looking for. Some banks charge fees for how many checks you write a month or charge for withdrawals on the account. It is also important to consider interest rates.

Some checking accounts pay interest to your account if you maintain a minimum balance. The higher your balance, the more interest you could earn and the fewer fees you'll have to pay. Also some banks have a minimum balance that is required to keep your checking account open or to avoid extra fees. There are some accounts that offer free checking, sometimes depending on the type of account.

Managing Your Checkbook

Once you have chosen your checking account its time to manage your checkbook. Your new checkbook comes with a register in which you should record all of your transactions. In the register you are to write the date in which you wrote the check, the check number, the amount of the check and to whom you wrote the check to. Also record any ATM withdrawals and deposits you make.

Protecting Your Checking Account