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Looking for safer ways to store money? Many people might think hiding the cash under a mattress or stuffing it into a plastic bag is the best solution. But these primitive options leave your cash susceptible to other sorts of dangers.
That being said, a checking account might be your solution. Let’s start by examining what benefits one might get if they open a checking account.
A little about checking accounts
Checking accounts are great for everyday transactions like deposits, withdrawals, and debit card purchases. They also offer direct deposits, automated transactions, and fraud protection. It is very easy to deposit and withdraw money using these accounts.
Checking accounts are suitable for making purchases such as daily groceries, bill payments, or ATM cash withdrawals. They usually don’t earn much interest, but you can make unlimited transactions (as long as you have money in the account).
Some of the most common types of checking accounts include:
●Traditional checking accounts: These offer checks, a debit card, and ATM access. They usually have a physical bank location. Fees may apply so check before opening an account.
●Online checking accounts: These are managed online or through a phone app. They don’t have physical locations, but you can bank from anywhere.
●Joint checking accounts: These have more than one account holder. They’re good for married couples or college students and their parents. Adding a joint account holder might increase FDIC insurance.
●Teen and Kid Checking Accounts: Some banks offer accounts for teens and children. They may include features like budgeting tools and transaction alerts for parents. These often need a parent or guardian as a joint account holder.
●Business Checking Accounts: If you own a business, this type of account helps keep your personal and business finances separate.
Having a checking account comes with its own set of benefits, which we will get into below.
Checking accounts provides safety of funds
Safety is a guarantee when you open a checking account. The bank becomes the custodian of your money, so it won't be stolen or disappear. Debit cards allow you to access your money as well as make payments for things.
In case you misplace your debit card, the correct thing to do is to contact your bank so that they can block it. If you report any loss, the banks will refund your cash. You can use an ATM to withdraw cash in the hour of need.
Your checking account is also insured. The FDIC covers most banks in America for up to $250,000. Credit unions are insured by the NCUA. So, if the bank or credit union fails, your money is protected up to $250,000.
A bank's proof of payment can boost your financial health
Your bank helps you manage your money, especially by providing proof of payment. If you have a checking account, your bank can give you records that show you’ve made payments.
Proof of payment is a document that confirms you paid a bill or other financial obligation. It can be a bank statement, transaction history, or payment receipt. These documents show the payment date, amount, and recipient.
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This proof is useful in many situations. For example, if there’s a dispute over a payment, these records can prove you paid. They’re also helpful for verifying payments during tax time.
Regular proof of payment is important for your credit. Paying bills on time and showing proof improves your credit report. This can raise your credit score, which helps you get loans, credit cards, or better interest rates.
Direct deposit, automated bill pay, and savings management
Paying on time makes everyone happy. Your checking account has an option for direct deposit payments. There, the money goes directly to your account on your paydate.
As a result, you do not need to go through the process of depositing paper checks. As a result, you get paid quicker and safer than before. If you don’t know how to set up direct deposit, read this article.
Another advantage of having a checking account is automatic bill payment. Paying bills every month can be overwhelming at times. A checking account allows you to set up automated bill-paying services.
This makes sure that all the bills are paid in good time, always without any delay. Ensure that there are enough funds in your account so as not to overdraw.
You can also automate your savings and investments. For example, if you have a savings account, you can set up automatic deposits.
This means a set amount of money goes into your savings each month. Even if you use different banks or credit unions, you can transfer money automatically, making money management easier.
Checking accounts provide convenience and access to reward programs
Money is quickly accessible using a checking account. You are free to make withdrawals as often as possible.
For instance, most savings accounts come with a limitation of only six withdrawals under Regulation D. With checking accounts, you can use your money without cash. You can also earn interest, get your paycheck earlier, and pay bills automatically.
Most banks are now offering reward programs. Debit cards can also be used to secure cashback and other rewards.
To access reward programs, you might be required to fulfill certain conditions, particularly those that involve mobile banking. This may include the use of an app or website to do banking as well as maintaining a certain balance in your current account.
Checking accounts can be used for small businesses
Small business owners should have a business checking account. They are similar to personal checking accounts, enabling you to control everyday financial transactions like deposits and bill payments.
A separate business checking account helps you distinguish between personal and business expenses. This makes filing taxes easier and presents your company’s finances in a more professional manner.
There are different advantages that come with various banks offering business checking accounts. Thus, it is important that one does research to choose the right one.
Opening a checking account has many benefits. Most people appreciate the convenience, safety, rewards, and online banking services it offers.
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