Checking accounts: Understanding the basics
What is a checking account?
A checking account is what makes it possible to complete daily financial transactions. It is a deposit account that allows you to deposit and hold money, pay bills, write checks, and make transfers. There is no limit on the number of times you can deposit or withdraw money from a checking account. Also, there is no limit to the amount of money you can keep in a checking account.
It is important to understand that there are different checking accounts, each serving a different purpose.
What are the different types of checking accounts?
Let’s look at the different types of checking accounts and the benefits of each one:
Traditional checking account
A traditional checking account is what most people think about when they think about a checking account. This account allows you to complete daily financial transactions and is designed for people who typically keep a low-to-average balance. Everyone’s needs are different and most financial institutions have different versions of their traditional checking accounts. A traditional account typically comes with standard checks free of charge when you open the account, so it is important to look at your options.
Traditional checking accounts usually require a minimum balance to open the account.
For example, at Simmons Bank, it is $100 to open a traditional checking account, called a Classic Checking, and $50 to open a Simply Checking account.
Interest-bearing checking account
An Interest-bearing checking account is an account for those who want to earn interest. It functions the same way as a traditional checking account, but to earn interest, the account must maintain a higher daily balance and not go below a predetermined minimum balance. Each one is a little different, so it is important to check all of the details before opening this type of account.
Digital checking account
Many banks and financial institutions have a checking account that can be opened completely online. At Simmons Bank, this account is called a Coin checking account. It is made for people who predominantly use mobile banking and don’t typically go into branches, but you have all the customer support from a bank if you need it. The benefit of an account like this is that there’s no minimum to open it and you have 45 days to make a deposit.
Second-chance checking account
If you do not qualify for the account types above, a second-chance checking account may be perfect for you. A second chance checking account allows you to perform all the financial transactions needed from a traditional checking account, but it is designed to protect you from overdrafts. Financial institutions can also offer different types of accounts like this to help you get back on your feet so be sure to explore every option.
After learning about each account, you may have narrowed down the type of checking accounts that are right for you. Additionally, you can also look here to compare Simmons Bank checking accounts in one place, side-by-side to see which one is right for you.
When you are opening a checking account, it is important to remember that you should open an account that fits your needs and the phase of life you are in. Make sure you understand the details and potential fees associated with the account. All accounts are subject to approval and if you have any questions, talk to your banker at Simmons Bank!