A checking accounts is an important banking tool that you can have aside from a savings account. Both are guaranteed by insurance up to a certain amount. Why do you need to supplement your savings account with a checking account in the first place?
A checking account comes with the following items;
1) Checkbook-this is the primary item that comes with the account. This is the legal instrument that you sign that authorizes the recipient’s bank to transfer money from you account to the recipient’s account.
2) Debit card-Debit cards are very convenient now in comparison to ATMs. With the debit card, you can immediately debit money from your account. You PIN in on the machine so that the transaction can be completed and you sign the transaction slip
Checking Account Versatility
Checking accounts are very versatile in the sense that they have various purposes that make them important to the account holder. Primary consideration is you don’t have to carry cash. You can use the checks for the following:
1) to pay bills and other household utilities-you use a checks to pay the bills and utilities and best of all the check is receipt or record of the transaction
2) to pay someone for services rendered or goods purchased- the recipient has to trust that you are going to fund the check that you handed out
3) to pay for items bought via mail- this is an important safeguard in buying items via mail
4) to pay off loans- you can pay high interest consumer loans with a check
5) to buy items in installment like a house- you have to issue a series of postdated checks to the lender
In order for you to handle your checks carefully, observe the following tips:
1) Always balance your checkbook after each transaction-this is important so you won’t be issuing checks that are in excess of the money in your balance
2) Keep track of debit card purchases-since you can also withdraw money with a debit card, you have to keep track of debit card transactions also
3) Do not sign your checks beforehand- it is important that you don’t sign checks beforehand because it could be picked up by someone else and money can be withdrawn from your account
4) Keep your checkbook in a safe place-this is to avoid people from getting your check and forging your signature.
Checking Account Downside
1) Your signature can be forged if you misplace your checkbook
2) Higher balances are required in a checking account as compared to a savings account The balances here earn minimal interest.
3) Checking accounts come with fees and penalties from using the facility and misusing the facility
4)You might have a limited number of checks that you can issue out
A checking account may have an interest smaller that a savings account but it is still necessary in your daily living. Having a checkbook is convenient and makes life easier for you. You just need to balance the pros and cons of maintaining a checking account and make the most of owning one.
Find out why getting a checkbook is important to your day to day transactions and how to make the most of having one at checking account.