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What is a Checking Account?

May 24, 2024 7 min

If you haven’t had a checking account before, you may be surprised at a checking account’s functionality. And if you already have one, keep reading – you may find new features that can help your financial journey.

Here are the basics: A checking account (or share draft account as it used to be called) is a financial account that lets you move money in and out to cover day-to-day expenses. You can use a checking account to transfer money electronically, make online payments, pay for in-person purchases, connect to cash-paying apps, and write checks.

Keep reading to learn more about checking accounts, how much they cost, and how to use them.

How does a checking account work?

A checking account is a repository for your money. There are several ways you can deposit money into a checking account:

  • Deposit a check (you can use our Mobile App or visit a branch)
  • Have money electronically transferred
  • Deposit cash
  • Transfer money from an associated savings or checking account
  • Receive your paycheck or benefit payment via direct deposit

You can also withdraw money from a checking account by:

  • Writing a check to someone else
  • Using your debit card at an ATM
  • Paying for a transaction
  • Transferring money electronically

In the old days, if you had a checking account, you had to balance your checkbook monthly. Today, checks and checkbooks are not as common. Instead, most members use online banking and the Mobile App to keep up with their balance and transactions.

Types of checking accounts

Contrary to what many people think, there isn’t only one type of checking account. You can often choose from one of the following types:

Student checking: These accounts will often have lower requirements than regular checking accounts, such as no minimum balance or no monthly maintenance fees.

Regular checking: These accounts may often charge a series of fees, and often come with a free debit card. The monthly service fee, if there is one, may be waived if you maintain the minimal required balance. Some credit unions and banks offer checking accounts without a monthly fee – like our Free Checking account.

Interest checking: These accounts will pay interest on the amount in the checking account. This interest rate may be comparable to what you might find with some savings accounts.

What is a checking account used for?

Most people use checking accounts to pay their bills from or to hold their money until they transfer it to another account, like a savings or investment account that earns a higher return.

Checking accounts are meant for everyday transactions because it’s set for easier money movement via a debit card, checks, Zelle®, bill pay, and more.

If you need to access money as quickly as possible, a checking account gives you the most flexibility compared to a savings or money market account.

Tips & Facts

Tips & Facts

Checking accounts are perfect for everyday transactions because there’s usually no limit on the number of withdrawals or deposits.

Common checking account fees

Checking accounts may come with the following fees:

  • Minimum balance requirements: Some checking accounts charge a fee if you do not maintain a minimum balance.
  • Monthly maintenance fees: Many banks charge monthly fees if you have a checking account. Sometimes these fees can be waived if you have direct deposit associated with the account or if you have a certain amount in the account.
  • Checks: Some banks provide free checks, while others will charge you if you order a set of checks.
  • Non-sufficient funds (NSF) fees: If you do not have enough funds in your account and a transaction attempts to go through, you may be charged an NSF fee.
  • ATM fee: Withdrawing funds from an out-of-network bank or credit union may result in an extra fee.
  • Wire transfers: Most checking accounts come with a fee if you send money or receive money via wire transfer.
  • Inactivity fee: If there are no transactions, withdrawals, transfers or other types of activity on your account for a long period of time, you may be charged an inactivity fee. Your account may even be closed for inactivity.

Patelco fees are explained clearly in our Fee Schedule. On the first page, you can also see our fee-free products and services.

How much can I overdraft my checking account?

When you use a debit card, the money will come from your checking account. And if you try to spend more money than is in your account, it will result in you overdrawing the account. This can come with a large fee that can be charged daily until the account is in the black. Every bank and credit union is required to disclose their fees, which can vary greatly depending on the financial institution. (Our Fee Schedule is online so you can see all the fees associated with our checking accounts.)

Not all checking accounts are set up for overdrafts. If your account does not allow overdrafts, then you will not be able to complete a transaction if you don’t have enough money in your account. The merchant will deny your transaction. This will also result in a non-sufficient funds fee.

Some checking accounts will allow for overdraft protection and will connect your checking account to a savings account. When you go over your checking account amount, the funds will be withdrawn from your savings account.

Is a debit card a checking account?

A debit card is not the same as a checking account. However, when you open a checking account, you will often receive a debit card that lets you pay for items by accessing money from your checking account. You can also withdraw cash by using a debit card, either at an ATM or as cash back when paying for something in person.

While debit cards may look like credit cards, they should be treated like cash because it accesses funds directly from your checking account. If you lose your debit card, make sure to report it immediately.


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