What is a checking account?

Woman signs a check in her home office.Image: Woman signs a check in her home office.

In a Nutshell

A checking account is a bank account used for depositing and withdrawing cash. Many people use checking accounts to pay their bills and cover everyday expenses like groceries and gas. Checking accounts also make it convenient to access cash at an ATM, by using a debit card for purchases or by writing a check.
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When people talk about having a bank account, they’re often talking about a checking account.

A checking account can be a convenient place to easily store and access cash to pay bills or everyday expenses like groceries and gas. There are a few different types of checking accounts, and depending on the bank, they could come with some handy features but also with some fees.

So if you’re thinking about opening a checking account, it’s a good idea to compare options from different financial institutions, like banks and credit unions, before deciding on the checking account that’s right for you.

Let’s take a closer look at what a checking is and how it works.

What is a checking account?

A checking account is a type of demand deposit account offered by a financial institution, such as a bank or credit union, that allows you to make deposits, withdraw cash and pay your bills.

People generally use checking accounts to store their money for the short term and access their funds with a debit card or by writing a check. Checking accounts are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC), so there’s some security with checking accounts versus storing cash at home and carrying it around for everyday use.

How do I open a checking account?

If you’re thinking about opening a checking account, the first step is to decide which financial institution you want to open your account with. There are several different types of financial institutions that offer checking accounts. These include:

  • Banks: Traditional banks with physical locations typically offer a few types of accounts, including checking accounts. Banks also commonly offer savings accounts, credit cards and loans, so this could be a good option for a checking account if you’re looking to do all your banking in one place.
  • Credit unions: Similar to banks, credit unions offer checking accounts, along with savings accounts, loans and credit cards. But you might have to become a member, and sometimes you need to be affiliated with a specific group or geographic area to join.
  • Online lenders and neobanks: Online-only banks and neobanks might not have physical locations that you can visit in person, but they still offer some of the same banking options you’d find at a traditional bank like checking accounts, plus the convenience of fully digital services.

Once you’ve selected a banking partner, your next steps will depend on its requirements. Many accounts require a small initial deposit – often somewhere between $25 and $100.

You might also need some form of government identification to open a checking account – usually a U.S.- or state-issued photo identification card, like a driver’s license or passport. Your Social Security number, a bill with your name and address on it, or possibly even your birth certificate could be required.

Types of checking accounts

Although you might just want a personal checking account, there are other options to consider, especially if you’re a student or small-business owner.

Personal checking accounts

Just like the name implies, personal checking accounts are for personal use. People typically use their personal checking accounts to deposit their paychecks, sometimes taking advantage of direct-deposit features.

And since personal checking accounts allow quick access to your money, people often use these to pay for everyday expenses like rent, gas, groceries and other bills. To access funds, you can make a cash withdrawal, use an ATM card, a debit card or write a personal check.

Business checking accounts

Business owners can use business checking accounts to make and accept payments as a company. Business checking accounts can be key to staying compliant as a legitimate business. To open one, you’ll likely need a Federal Employer Identification Number, or EIN.

Student checking accounts

Some banks offer student checking accounts, which are designed just for students and may have perks like low or no service charges, overdraft forgiveness and low minimum opening deposits.

Some banks may also offer students tools, calculators and educational material to help account holders develop healthy financial habits, like learning to save money or manage a loan.

Consider a free checking account

A free checking account is a basic checking account that doesn’t charge any recurring fees, such as monthly maintenance fees. 

Do your research before signing up, since hidden costs can eat away at your savings. For example, you may have to pay out-of-network ATM charges, overdraft fees, foreign transaction fees and other charges or penalties. 

Some accounts may even have a minimum balance requirement, meaning you have to keep a certain amount of money in your account to avoid additional charges.

If you’re looking for a checking account that’s free to open, you might want to consider a Credit Karma Money™ Spend online checking account. It comes with no penalties, overdraft fees or minimum balance requirements.

And when you set up direct deposit with Credit Karma Money™ Spend, you can get access to your paycheck up to two days early and federal benefits up to five days early.

What’s the difference between a checking and savings account?

A checking account is usually best for storing your money for the short term. It’s relatively easy to deposit and withdraw money from a checking account, so it’s ideal when it comes to paying for day-to-day expenses like groceries or other bills.

Savings accounts are usually used to set aside money for the future, and they typically earn interest. This makes them more ideal for stashing away cash for longer-term savings goals, like buying a car or making a down payment on a home.

What to consider when opening a checking account

Not all checking accounts are the same, so it’s important to look at the fine print. Features, benefits and even fees can vary, depending on the financial institution.

Here are a few things you may want to compare when looking at checking accounts:


Banks commonly charge fees for certain things, like overdrafting your account, using another bank’s ATM or not maintaining a minimum deposit. Banks may also charge monthly maintenance fees just for keeping your account open and processing transactions.

Minimum checking account balance

Some checking accounts may require you to maintain a minimum balance. If your account balance falls below this amount, you may be subject to fees. To avoid this, look for a checking account with no minimum balance requirement — or a requirement that’s low enough for you to meet.

ATM locations

If you plan to withdraw cash from your checking account using an ATM, it’s important to select a bank that has ATMs in your area — or at least reimbursement for ATM charges that other banks may charge. This could help you avoid ATM fees for withdrawing money from another bank’s ATM.

Online services

Many entities offer mobile apps that allow you to access your accounts any time of day. Some also offer online bill payments, virtual check deposits and money transfers.

What’s next?

A checking account can be a convenient and secure way to store your money and make payments for everyday expenses. But you may also want to consider opening a savings account for your longer-term financial goals.

Learn more about checking vs. savings accounts.

About the author: Sarah Sidlow is a freelance writer and editor based near Detroit. She has a master’s degree in journalism from Georgetown University. Sarah’s work has appeared in Luxembourg’s national newspaper, Washington City Paper… Read more.