What Is A Checking Account?

With so many different types of bank accounts, it can be hard to know what each one is used for and which ones you actually need. A checking account is one of the most important accounts you can have, because it’s designed for everyday spending and money management. 

A checking account should serve as the base for all of your other accounts. In this article, we’ll break down everything you need to know about what a checking account is, including the different types of checking accounts, how much money to keep in a checking account, and how to open a checking account to start managing your money. 

To get started, you can open a checking account online or by visiting one of our local branches. 

What is a Checking Account Used For?

Think of a checking account as the main “hub” for your finances, where your money flows in and out of. This is the account where your paycheck gets deposited, where you pay bills, and where you move money. 

The main benefit of checking accounts is how easily you can access and move your money whenever you need it, which is also the biggest difference between checking and savings accounts. Savings accounts are meant for money you don’t need right away, while the primary purpose of a checking account is for everyday use. 

Because the purpose of a checking account is for money management, knowing what features are available can help you get the most out of your account.

Common Types Of Checking Account Features

The purpose of a checking account is everyday use, and its features make that possible. Most checking accounts include check writing, a debit card for purchases, ATM access for cash withdrawals, and the ability to set up recurring payments or transfers. 

Some checking accounts offer Early Pay,Direct deposit and earlier availability of funds in your Arkansas Federal account are subject to your employer/payer, or benefit provider’s funding. Actual payment dates may vary. which allows you to receive your paycheck early. At Arkansas Federal, when you sign up for a checking account with digital banking, you can get paid up to two days early. 

While checking accounts make it easy to manage your money, it’s also important to understand any limits or requirements that come with these accounts, such as minimum balance requirements, potential fees (overdraft or maintenance, or ATM), and how easily you can access your money. It’s also helpful to think about how you prefer to access your money. Some people like having a local branch they can visit if they need help, while others are happy doing everything through online or mobile banking.

Understanding these features and requirements can help you choose the type of checking account that fits your needs. 

The Different Types Of Checking Accounts

Checking accounts are designed to help you manage your finances, but not every checking account works the same way. There are several types of checking accounts that offer different features, benefits, and requirements depending on how you plan to use them.

Below are some of the most common types of checking accounts and what they’re used for:

• Traditional Checking: A personal checking account designed for a single individual’s everyday banking.
• Joint Checking: A checking account owned and managed by two or more people, typically used by couples or family members who share finances.
• Business Checking: An account designed for business owners to manage business funds and keep earnings separate from their personal finances.
• Student or Child Checking: Accounts designed for students or young adults opening their first bank account, and typically offer lower fees and minimum account balances.
• High-Yield Checking: Checking accounts that earn higher interest, but typically come with higher balance requirements and withdrawal limits.

Knowing the different types of checking accounts and your needs can help you decide which checking account option is right for you. 

How Much Money Should I Keep In My Checking Account?

How much money you should have in your checking account will depend on your financial situation and spending habits. There’s no one-size-fits-all number, but a good starting point is keeping enough to cover any account minimums your bank requires. How much you keep in your checking account should also account for the amount you need to pay your bills. 

To figure out the right amount, look at your typical monthly spending and add a small buffer. While having a bit of a cushion can help you avoid fees from dipping below account minimums or declined debit card transactions, you don’t want to keep too much excess in your checking account. Aside from what you need to cover your expenses, the rest of your money would be better placed in a savings or investment account where it can grow more in interest. 

What Do I Need To Open A Checking Account?

What is required when opening a checking account can vary depending on the bank or credit union you are working with, but most places will ask you for the following:

• A valid form of identification, such as a driver’s license, passport, Matricula Consular card, or Employment Authorization Document (EAD).
• A social security number (SSN) or Individual Taxpayer Identification Number (ITIN)
• Contact information, such as your address and phone number
• Some banks may require a minimum deposit to open the account. 

To open a checking account with Arkansas Federal, you’ll first need to become a member of the credit union if you aren’t already. If you’re not currently a member, you can complete the membership process as part of your checking account application. If you’re already a member, you can open a new checking account by logging in to digital banking and selecting “Quick Apply” to request the account.

Common Checking Account Questions

As you learn about checking accounts and consider opening one, it’s normal to have a lot of questions. Below are common questions you may have about checking accounts: 

Does Opening A Checking Account Affect Your Credit Score? 

In most cases, opening a checking account does not affect your credit score. This is because banks and credit unions typically use a soft credit check for your application, which does not impact your credit score. In general, your credit score is only impacted when a hard credit check is pulled. 

Can You Have Two Checking Accounts At The Same Bank?

How many checking accounts you can have can vary by the bank or credit union you’re working with. It’s fairly common for banks and credit unions to allow more than one checking account at the same financial institution, but it’s always a good idea to check with the specific institution to confirm what’s allowed.

At Arkansas Federal, members can have more than one checking account to help manage their finances. For example, someone can have one account for personal spending, a joint account with a partner, or a separate account for business expenses.

Is A Debit Card A Checking Account? 

A debit card is not the same thing as a checking account, though they are related. A debit card is a way to access and use money in your checking account. 

A debit card looks and acts similarly to a credit card, but is different because the money used for transactions is from your checking account balance. This means the amount you spend on your debit card is limited to the funds available in your account, unlike a credit card, where you receive a line of credit and can borrow money. 

What Is A Routing Number For A Checking Account? 

Each checking account you open will have a routing number and an account number. The routing number is a numeric code that identifies the financial institution you have your account with, such as Arkansas Federal. This is different from your account number, which is specific to your checking account. For instance, if you had two checking accounts with Arkansas Federal, they would each have the same routing number but different account numbers. 

You can find your routing and account number in your online banking portal, or on the bottom of a check. Here is how to tell which number is the account number and which is the routing number on a check: the first set of numbers at the bottom is the routing number, and the second set is the account number. The routing number will be 9 digits, and the account number will typically be between 8 and 12 digits.

Open a Checking Account with Arkansas Federal Today

A checking account is the foundation of your finances and helps you manage your day-to-day spending. Arkansas Federal offers a wide range of checking accounts with different features and benefits to help you meet your financial goals. 

Whether you’re looking for a simple checking account, a high-yield option, or a business checking account, Arkansas Federal has an account that can fit your needs. Open a checking account today online or visit your local Arkansas Federal branch to get started.