[Answered] What Is A Checking Account & What Is It Used For?

a couple sitting at their kitchen table on a computer trying to understand what is a checking account used for

Given that they are such a convenient and ubiquitous way to manage money, most people are familiar with checking accounts. However, it may not be easy to define exactly what they are and what they’re used for. Here, we’ll look into the definition and use of checking accounts as well as the different types commonly available.

What is a Checking Account?

A checking account is defined as a deposit account that allows deposits and withdrawals, often with the use of paper checks (hence the name). Deposits and withdrawals can also be made through ATMs, electronic transfers, or a debit card connected to the account.

Checking accounts are made with financial institutions such as credit unions or banks. Opening a checking account with a credit union gives you an easy way to store and use funds, and your account may have additional features as well.

Features of Checking Accounts

Most checking accounts have several basic features. These features include the following.


As part of the name, you can use checks to withdraw or transfer money from your checking account. A check is a paper document that must be filled out properly with the amount of money being transferred and the name of the payee. The check is then delivered to the payee, who deposits or cashes the check with their own financial institution, after which funds are transferred over.

Using checks can be a little time consuming, but it’s the preferred method of paying money from a checking account for many people and organizations.

Debit cards

Another method for using the funds in your checking account is a debit card. Debit cards are connected to your account, and any time you use it to pay for something, funds are withdrawn from your account to make the payment.


Not all checking accounts come with interest, but some do.

For instance, your credit union may offer checking accounts that generate a small percentage of interest from the funds you have stored in your account. The higher your checking account balance, the more you’ll get from interest.

Overdraft protection

It may be easy to lose track of the amount you have stored away in your checking account, and at times, funds may run low. In those cases, you might accidentally try spending more than you have in your account, which is where overdraft protection comes in.

Rather than cause your debit card to be declined entirely, funds are automatically transferred from a linked account (such as a savings account) to your checking to cover the purchase. Often, your institution will charge a fee to perform this service any time it’s triggered.

Online bill pay

With online bill payment, checking account users can transfer funds online without having to write out checks or use a debit card. These payments may be set to one-time events or recurring payments for monthly bills.


Some checking accounts come with various fees to make sure they’re profitable to the financial institution providing them. These may include:

  • Minimum balance fees
  • Monthly service fees
  • Overdraft fees
  • Returned deposit fees

Not all checking accounts charge the same fees, so it’s worthwhile to find a credit union that offers the best deal for your situation.


Many accounts offer rewards and perks to users who meet certain qualifications. Those may entail meeting a minimum balance requirement or making a certain number of purchases with a debit card each month.

Types of Checking Accounts

Checking accounts come in different types, each with its own typical fees and features. A few of the most common include those below.


A standard checking account offers basic services, including checks, a linked debit card, and online bill pay. These may include monthly fees or minimum balance requirements, and they might be linked to a savings account. Overdraft protection services are another common feature.


Online banking with a checking account is done through a computer browser or mobile device, making it a convenient way to check your balance, transfer funds, make payments, and even make mobile check deposits.


Many premium checking accounts offer features that either may not be available with conventional accounts or which would otherwise have to be paid for, such as checks, money orders, and fees.

Premium accounts typically have associated requirements, such as maintaining a minimum balance.


Credit unions and other financial institutions often offer special accounts for specific demographics or entities. A few examples include:

  • Student accounts, which are designed for people aged 18 to 24
  • Senior accounts for those above the age of 60
  • Business accounts for commercial entities
  • Rewards accounts, which offer rewards for spending or meeting specific qualifications

The exact perks offered by each type of account vary by institution, as do the specific requirements.

Opening a Checking Account

Opening a checking account at your financial institution is a simple process. To start a checking account with a credit union, all you need are:

  • A valid photo ID
  • Proof of address
  • Your date of birth
  • Your social security number (SSN) or taxpayer identification number (TIN)
  • Opening balance

Most checking accounts require a minimum opening deposit, but that may be as low as $5 for basic accounts.

With respect to credit unions specifically, you’ll also need to be a member of the institution. Qualifying to join a credit union is easier than you might think, however, since they’re often open to anyone living or working in the general area.

If you’re not sure about opening a checking account at a credit union, it’s worth your time to look into the exact requirements and benefits of joining an institution in your area.

How to Open a Checking Account


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