> **Definition**
>
> A checking account is a financial account designed for daily use and spending, such as withdrawing cash from ATMs or buying groceries with a debit card.

## What Is a Checking Account?

A checking account is a financial account designed for daily use and spending, such as withdrawing cash from ATMs or buying groceries with a debit card. Checking accounts are available from banks and credit unions, including traditional brick-and-mortar banks and [online-only banks](https://www.investopedia.com/the-best-online-banks-11722209). 

### Key Takeaways

*   Checking accounts are designed for everyday transactions, like buying groceries, receiving a paycheck, or withdrawing cash at an ATM.
*   Most [checking accounts](https://www.investopedia.com/best-high-yield-checking-accounts-5070332) come with a debit card that you can use at ATMs or retailers.
*   Many checking accounts come with fees for monthly maintenance, certain types of transactions, or spending more than your balance.
*   Federal deposit insurance protects up to $250,000 in a checking account at FDIC-insured banks and NCUA-insured credit unions.

![Checking Account](https://www.investopedia.com/thmb/XqEncv-17f1m1Hrj1qMkbOC29XI=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/checkingaccount-a9e8ff2d6d4b44d186c338de06e4bff1.jpg)

*— Investopedia / Zoe Hansen*

## How Checking Accounts Work 

Checking accounts are designed for everyday use. You can deposit money in your checking account at an ATM or receive your paycheck by [direct deposit](https://www.investopedia.com/terms/d/directdeposit.asp). You can also withdraw cash from your account using an ATM, or use your debit card to pay for products and services with the money in your checking account. Checking accounts let you pay your bills online and send money through payment apps.  

> **Fast Fact**
>
> Some credit unions call checking accounts “share draft accounts.”

Checking accounts may come with a monthly fee, which is often waived if you meet requirements such as maintaining a minimum balance or receiving a certain amount in direct deposits. For example, the [Chase Total Checking account](https://www.investopedia.com/chase-bank-promotions-7099363) costs $12 per month, but that fee is waived if you receive $500 in direct deposits, keep at least $1,500 in the account at all times, or maintain a balance of at least $5,000 total in eligible Chase accounts. 

Many banks and credit unions offer [free checking accounts](https://www.investopedia.com/free-checking-accounts-8697609), which by law can’t charge monthly fees or require a minimum balance. This type of checking account may offer relatively basic services but can often be enough for most people’s needs.

  
Some checking accounts pay interest on your balance, though they may require you to keep a certain amount of money in the account or make a certain number of transactions each month. These interest-bearing checking accounts typically pay lower rates than [savings accounts](https://www.investopedia.com/high-yield-savings-accounts-4770633), but if you’re willing and able to follow the requirements to the letter, you can find good options.  

> **Tip**
>
> Check out Investopedia’s list of the best high-yield checking accounts, which we update continually as offers change.

## Checking Account Features

What you can do with a checking account varies based on the type of account and the institution, so it’s important to read your account agreement carefully. Common checking account features include:

*   **Deposits**: You can deposit cash and checks at an ATM or physical bank branch, and deposit checks [using mobile deposit](https://www.investopedia.com/how-to-make-mobile-check-deposits-7975275) through your bank’s app. Direct deposit lets you electronically receive paychecks from your employer and government payments, such as tax refunds. 
*   **Withdrawals**: You can use your debit card to withdraw cash at an ATM or from a bank teller.
*   **Debit cards**: Tap or swipe your debit card at a retailer to pay with money from your checking account. Some banks and credit unions offer [zero-liability fraud protection](https://www.investopedia.com/terms/z/zero-liability-policy.asp) in case your debit card is lost or stolen.
*   **Checks**: Your checking account may come with free paper checks, or you may have to pay a fee for them.
*   **Fees**: Your account may have a monthly fee, as well as fees for certain types of transactions. Review your account agreement so you understand what fees might be charged.
*   **Overdraft protection**: Spending more money than you have in your account is called an overdraft. Some banks offer overdraft protection, a service that helps cover this type of transaction, but it usually comes at a cost. Make sure you understand [how overdrafts work](https://www.investopedia.com/terms/o/overdraft-protection.asp) in your account and avoid spending more than your account balance. Some accounts simply do not allow you to spend more than you have.
*   **FDIC/NCUA insurance**: If you open your checking account at a bank that’s a member of the Federal Deposit Insurance Corporation (FDIC), your balance up to $250,000 is covered in case the bank fails. If your checking account is at a credit union, the National Credit Union Administration (NCUA) offers similar coverage.
*   **Rewards and bonuses**: Some checking accounts offer [bonuses for opening the account](https://www.investopedia.com/the-best-checking-account-bonuses-8764477) and meeting criteria like receiving multiple direct deposits or maintaining a minimum balance. Others offer cash-back rewards based on your debit spending. Read the fine print on any offers to be sure you’ll qualify.  
    

> **Tip**
>
> Investopedia tracks bonus offers from 20+ institutions to find the best bank account bonuses—sometimes worth up to $1,000.

## Types of Checking Accounts

Most banks and credit unions offer at least a few types of checking accounts, though many won’t offer all of these.

### Traditional Checking Accounts

A basic checking account usually doesn’t offer interest or rewards. It may come with a monthly fee, though you can usually get it waived by maintaining a minimum balance.

### Premium Checking Accounts 

A [premium checking account](https://www.investopedia.com/articles/personal-finance/052715/premium-checking-account-worth-it.asp) typically requires a much higher minimum balance, such as $20,000 or $30,000. In exchange, it offers perks like [waived ATM fees](https://www.investopedia.com/the-best-checking-accounts-with-no-atm-fees-11742420) or special rates on loans or [certificates of deposit (CDs)](https://www.investopedia.com/best-cd-rates-4770214).

### Joint Checking Accounts

A [joint checking account](https://www.investopedia.com/best-joint-checking-accounts-5088312) is similar to a typical checking account, but two people have full access to the funds. 

### Business Checking Accounts

A [business checking account](https://www.investopedia.com/the-best-small-business-bank-accounts-8782069) is designed to handle the daily spending and deposits of a small business. To open a business account, you’ll need to show documents proving your ownership of the business.

### Student Checking Accounts

A [student checking account](https://www.investopedia.com/what-is-a-student-bank-account-7643916) offers basic checking account features for high school or college students. If the account holder is under 18, a parent or guardian typically needs to be a co-owner.

### Low-Balance or Lifeline Accounts

Aimed at people who haven’t had a bank account before or who earn lower incomes, these basic accounts charge low or no fees and don’t require a minimum balance. [Lifeline accounts](https://www.investopedia.com/terms/l/lifeline_account.asp) are required by law in some states, such as New York. 

### Second-Chance Checking Accounts

[Second-chance bank accounts](https://www.investopedia.com/second-chance-bank-account-8684117) offer banking options for people who don’t qualify for a traditional checking account due to a history of overdrafts or bounced checks.

Find options that might work for you on this [list of certified second-chance bank accounts](https://joinbankon.org/accounts/) from Bank On, a national nonprofit initiative.  

### Senior Checking Accounts

Age might be just a number, but adults over certain ages can qualify for [senior checking accounts](https://www.investopedia.com/articles/personal-finance/060316/top-10-checking-accounts-seniors-jpm-wfc.asp) with reduced fees or added perks. 

## The Bottom Line

A checking account is a great choice for your everyday banking needs, such as receiving a paycheck and shopping with a debit card. Some checking accounts come with monthly fees, which you can usually avoid by maintaining a minimum balance. Many financial institutions also offer free checking accounts.