What is a Checking Account? 

Written by:

Baylor Cox

Reviewed by:

With all of the different account types offered by banks and credit unions, it can be easy to get confused about which account type is best for your situation. To help you understand the difference between account types, this article will focus on checking accounts. 

In simple terms, a checking account is an account designed to be used for everyday purchases. Like savings accounts, if your credit union is insured by the NCUA then your checking account is too, up to $250,000.  

Most checking accounts come with a debit card, which you can use to fund purchases directly from your checking account’s balance. You can also write checks from your checking account.  

A helpful visual is to think of a checking account as a digital wallet that stores money you intend to use. If a checking account is your digital wallet, then your savings account is like a digital piggy bank where you can save your money and earn interest in the meantime. 

Typically, savings accounts will have a cap on the number of withdrawals or transfers that you can make in a month; checking accounts do not have these restrictions since they are designed for you to make purchases from.  

Benefits of Checking Accounts 

Checking accounts are available at almost every bank and credit union, and many financial institutions offer unique perks and bonuses for using their checking accounts. As mentioned before, the number of purchases and withdrawals you can make from your checking account is typically limited only by the amount of money you have deposited.  

Other benefits of checking accounts vary by financial institution and even between account types. WeStreet offers five different checking account options so you can choose which one best suits your personalized financial needs: 

• Free Checking – No minimum balance and no monthly service fee when you sign up for E-statements. You can also receive cash back rewards and free credit monitoring. 

• Rewards Checking – For a $6 monthly service fee ($4 with available discount) you get everything offered in Free Checking, plus: access to the WeStreet Rewards app which includes up to $1,200 in cell phone protection, local and national discounts, ID theft aid, and roadside assistance. 

• Interest Rewards Checking – For an $8 monthly service fee (which is waived if your combined balance across your WeStreet accounts is over $5,000) you get everything in Free Checking & Rewards Checking plus: you can earn interest dividends on your checking account balance, and you are eligible for a discount on auto loans. 

• Teen Checking – Parents can monitor the account online; it earns interest dividends and has no monthly service fee with E-statements. 

• New Beginnings Checking – Designed to help you build or rebuild your credit, you can graduate to a Free Checking account after 12 months. It has a $10 monthly service fee. 

What’s Best for You?  

There are a lot of options here so it may be helpful to ask yourself what is most important in a checking account to help you decide which option is best for you: 

Goal	Account Type

I’m looking for a free checking account option

Free Checking

I’d like to be rewarded for making the purchases I already make

Rewards Checking

I plan to have a high balance in my WeStreet accounts and would like to earn interest on my checking account

Interest Rewards Checking

I want to open an account for my teenage child so I can help them learn financial skills

Teen Checking

I need to start building or rebuilding my credit

New Beginnings Checking

Multiple Checking Accounts – Yay or Nay? 

There aren’t any penalties to having multiple checking accounts. Opening multiple checking accounts can be beneficial though there are a few minor drawbacks to consider. 

Having multiple checking accounts open as part of an automated budgeting process can be beneficial. Separating funds into different checking accounts to cover bills, discretionary spending, and food costs can help you keep on track with your budget. Multiple checking accounts means that your money may be more spread out, which can be good or bad. If one account is frozen due to fraud alert, you’ll still have access to the funds in your other accounts.  

Be careful when opening multiple checking accounts as the monthly fees can add up if you open accounts with monthly fees. Having several checking accounts also means more things to keep track of. Unless you plan on setting up a series of checking accounts for multiple spend categories you can safely operate with just one or two checking accounts. 

Hopefully after reading through this article, you understand more about checking accounts in general and have a greater understanding of which checking account fits your needs best. Keep in mind that no matter which checking account you choose you’ll get access to WeStreet’s Money Management tools and the Credit Score tool to help you on your financial journey.