| A checking account is a service rendered by financial institutions which allows bank customers to put money and take funds out from a federally-protected account at any time. Different banks and other financial institutions apply different definitions for a checking account, but generally checking account holders can use personal checks in place of cash to repay debts. Debit cards or ATM cards can also be used to access individual accounts or make cash withdrawals.
Practically every bank provides some type of checking account service. Some may require an initial deposit before establishing a new account. A student or other low-income applicant may opt for a no-frills checking account where personal checks and other services are free. Other customers may benefit from interest rate payments, providing that they sustain a high minimal balance each month.
A typical checking account is managed through thorough posting of credits and debits. The account holder is supplied with official checks which contain all of the essential routing and mailing information. When a check is filled out appropriately, the recipient can deposit it into his or her own bank account. A bank worker then files the check electronically and the check writer's bank receives the cancelled check and sum to be withdrawn from the check writer's account. This process is applied for every check written against an individual checking account.
Checking account holders should keep track of their balance, although the financial institution will routinely issue its own accounting statements. Checks must reflect an actual amount contained in the checking account itself. If a check is written for an amount of money higher than the available balance, the check writer faces numerous fees and possible legal activeness. The recipient of the 'bad' check can demand immediate cash payment for the original debt and a substantial fee for the returned check. Some financial institutions will protect checking account holders by making the appropriate payments and notifying the check writer about the overdraft. Often the financial institution will recoup their losses by charging for services rendered, so it pays to avoid writing checks when the balance is unknown.
Most banks have several different techniques which allow checking account holders to check their balances and reconcile their records. Monthly statements of withdrawals and deposits are sent to checking account holders. ATM machines provide an option to check the balance, while online or phone-in accounts can render real time updates on processed and still unpaid checks.
For detailed information on checking accounts, visit www.checkingaccount.ca. |
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