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Understanding the different types of checking accounts

Credit unions, traditional banks, and other types of financial institutions all offer many different types of checking accounts, such as classic checking and rewards checking. While classic checking accounts don’t typically pay interest, some rewards checking accounts do. Read-on to learn more about checking account options.
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What is a checking account?

A checking account is a type of banking account that lets people make deposits and withdrawals as needed. This included using ATMs, depositing checks and cash, writing checks, enrolling your monthly bills in automatic bill pay to ensure on-time payments, transfer money between different accounts, and the ability to make deposit transactions such as receiving direct deposit of your income, tax refund, or pension payments.
There are many checking account options. Visit your local credit union or bank to see what’s available in your area.

Types of checking accounts

Here is an overview of different types of checking accounts:
Traditional checking account. Also known as regular or classic checking, a traditional checking account is for making daily deposits and withdrawals (in-person, through ATMs, or online). Traditional checking accounts include a debit card and checks. These accounts don’t typically pay interest on the balance you maintain.
Student checking account. These are like traditional checking accounts and have no fees and lower minimum balance requirements.
Rewards checking account. Rewards are earned for purchases made using the debit card that comes with the account and these rewards may be used as a statement balance credit or used to purchase merchandise. To earn rewards, a minimum number of transactions per month are required and a small monthly account fee may be charged. Some rewards checking accounts pay interest on the account balance.
High interest checking account. To earn high interest a high minimum balance is required.
Senior checking account. These accounts may offer perks that benefit seniors, such as waived fees and free checks.

Business checking account. Business owners can open an account in the name of business so they can execute transactions apart from their personal banking accounts. Business-friendly banking tools and resources are provided.
Money market account. A money market account is a type of savings account. Money market accounts are interest-bearing accounts, meaning that interest is paid on the account balance. Although a money market isn’t a checking account, most money markets come with a debit card and checks and a limit to how many withdrawals can be made each month.
Second-chance account. People who have been turned down for a checking account due to a bad banking history or poor credit may apply for a second chance account. These accounts may come with fees and limited features.

Checking account FAQs


How can I open a checking account?

Start by researching different checking account types. Credit unions and traditional banks offer several types of checking accounts, such as classic checking and rewards checking, which typically can be opened online.  

What can a checking account be used for?

Account holders can use a checking account to make deposits and withdrawals. This included using ATMs, depositing checks and cash, writing checks, using  automatic bill pay to pay loans, phone and utility bills, and other recurring charges, as well as making other financial transactions.

Checking account vs. savings account: what's the difference?

A checking account can be thought of as “outgoing” funds and is traditionally used for receiving payments from others, writing checks, and making debit card withdrawals at ATMs. A savings account is for incoming funds that will be saved. Most people have both types of accounts. Savings accounts typically earn interest and the more money you keep in the account, the higher the interest you’ll earn.
Learn more about the difference between checking and savings accounts.

How much should I keep in my checking account?

In general, it's a good idea to have enough money in your checking account to cover one to two months of living expenses, plus extra money in case of an emergency. How much you keep in your checking account ultimately depends on your unique financial circumstances, your monthly earnings and debt.

Does opening a checking account affect your credit score?

Generally, opening a checking account doesn’t affect credit score. When you apply for a checking account the credit union, bank, or financial institution may do what is called a “soft inquiry” to view your credit score.
A soft inquiry will not affect your credit score. If you are concerned about your credit score, ask the financial institution whether they look at your credit as criteria for opening a checking account. For example, Credit Union of Southern California does not report opening or closing savings or checking to the credit reporting agencies (Experian, TransUnion and Equifax), which means that credit scores aren’t affected.

How much does it cost to open a checking account?

It is free to open a checking account. However, all financial institutions have a minimum opening balance requirement, typically anywhere from five dollars to one hundred dollars.

Do checking accounts earn interest?

Some checking accounts, called “high yield” checking accounts, do earn interest. Financial institutions that offer interest in a checking account typically have requirements that must be met for the account to qualify.
For example, account holders may need to maintain a specific minimum balance, perform a minimum number of withdrawal/debit transactions each month, use their debit card for a specific number of transactions, and receive direct deposit into the account. Keeping track of these requirements can be burdensome or challenging to adhere to. Ask yourself if the requirements are worth the interest rate being offered and take an honest look at whether you’ll be able to meet the requirements.
However, if you can meet the account requirements, earning interest is one of the benefits of having a checking account.

How many checking accounts can I have?

There is no limit to the number of checking accounts a person may have. For example, you may have your own personal account, an account shared with your spouse, an account with your child, and an account shared with another family member or business partner.


Why savvy consumers choose CU SoCal

For over 60 years CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.
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Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


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