Why You Need a Checking Account (and how not to regret having one!)

why you should have a checking accountThe last time you bounced a check; did you seriously consider closing your checking account? The pain of returned check fees, the monthly service fees, the negligible interest on interest bearing checking accounts, -and the fact that even when you swear the bank has made an error, they are usually right-, may have made you, like many rueful bank customers, feel that this time you should just close your account.

You may never have even opened an account because you heard other people complain. After all, today’s returned check fees are usually $36, even if you just charged a pack of gum. It definitely burns, and it’s easy to make a mistake. However, the convenience and credibility of having a checking account makes it worthwhile to get one and take precautions not to overdraw your account.

Some of the conveniences of having a checking account go beyond paper checks. A checking account allows you to pay bills by mail without the cost and inconvenience of getting a money order, but these days you can also pay most bills online for a monthly $5 charge. Another convenience is the debit card which comes with checking accounts today, which is used like a credit card, but without the temptation of high-interest personal debt.

Capital One 360 free checking accountSo what about accidentally overdrawing your account and racking up returned check fees? There are several things you can do about this when you set up or review your account. One is to ask that your debit card be set to deny if you don’t have sufficient funds for the purchase you are trying to make. For example, say you want to buy a shirt, and you don’t realize that you have a low balance. Instead of accepting the purchase and generating a bounce charge, it will deny the sale. Another is to apply for “bounce protection;” usually a $500 credit limit to cover you if you go over. There is interest on this, but it is cheaper than bouncing a check.

One additional trick is to buy prepaid credit cards for other revolving charges which may catch you unawares. For example, say you have student loans and internet charges which are the same amount every month, but you continually forget the dates. On the day you receive your paycheck, transfer the amount, plus a few dollars, that you will need to pay those bills from your checking account to your prepaid Visa. Have the revolving charges go to that card, and forget about it. Everything can be done online, and most can be automated. Also, don’t forget that you will be building good credit- and credibility.

Recommended: Want a free checking account?  Try out Capital One 360.  If you do, then they could give you $50!

However, nothing substitutes for staying on top of it. Many people don’t think taking the time to keep the checkbook ledger up to date is worth the trouble, and think that by checking their balance occasionally they can remember how much they have, but if you consider that two minutes could save you $36 dollars, you may change your mind. So get and keep a checking account, but keep it responsibly.

Author Bio: Louis Patrick enjoys writing about the American banking industry.

Looking for a free business checking account?  Check out my ever growing list of banks that offer such a service.

Image courtesy of Pixomar / FreeDigitalPhotos.net

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30 comments
moneystepper says September 3

“One is to ask that your debit card be set to deny if you don’t have sufficient funds for the purchase you are trying to make.”

This seems like the most sensible thing to do. Is this option available for all checking accounts?

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    Grayson says September 5

    I did this on my account as I want to know if I am going to overdraft and not have to pay the fee.

    Reply
FI Pilgrim says September 3

I agree with Moneystepper, turning off the “overdraft protection” service is a good idea. Once I did that a couple of years ago, my bank prompts me to turn it back on all the time, but I know better…

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    Grayson says September 5

    Overdraft protection really only makes the bank money and doesn’t do you any favors.

    Reply
DC @ Young Adult Money says September 3

I have a friend who didn’t open a checking account until he was in his 20s. How he did that I will never know, because even in high school I had a checking account and was paying bills with it. Hard to imagine living without one.

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John S @ Frugal Rules says September 3

The setting your card to deny if you don’t have the funds to cover the purchase is a great idea. I worked at a bank right out of college and people are always getting slammed with overdraft costs and such. Something like that might help some people avoid those costs.

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    Grayson says September 5

    The banks make so much money on these fees that it really doesn’t make sense to have it enabled. Turn off overdraft protection.

    Reply
Michelle says September 3

I have always had a checking account, and I don’t know how I would go without it!

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Edward Antrobus says September 3

Can you live without a checking account? Well, yes, but prepaid debit card fees and check cashing fees are easily twice as expensive as a what you would pay for a checking account with a monthly fee.

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    Grayson says September 5

    Of course you can live without one. Millions of people do, but they tend to pay more for access to their money than ones with checking accounts do.

    Reply
Joshua @ CNAFinance.com says September 3

I remember when credit cards didn’t give you the ability to automatically deny over limit purchases. That’s definitely a great idea to set up these days! Thanks for the great read!

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    Grayson says September 5

    That changed when the economy tanked and the banks had to be bailed out.

    Reply
Romona @Monasez says September 3

I’m not a fan at all of prepaid cards. The fees they charge are crazy. But I have a student checking account n everything is going great with it. At one point I had over draft protection but it was killing me by draining my savings. I find that having the bank app on my phone and checking my account that way has worked best for me.

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    Grayson says September 5

    There are some prepaid cards that don’t charge the crazy fees. Yes, they have fees, but they are not outrageous. I see some advantages to prepaid cards in the right circumstances.

    Reply
Marissa@Financetriggers says September 3

There are some people who have lived without checking accounts, I don’t know how or why but I do agree one needs it. Setting a limit is always is a great idea not only for checking accounts but for a lot of things, too!

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Jane Savers @ Solving The Money Puzzle says September 3

I had an emergency visit from the plumber on Labour Day and they don’t take credit cards. I have 50 cheques and can’t ever imagine using them all but the ones I do use go to small businesses, like the plumber, that come to my home.
I do have a traditional chequing account but it is stripped of any bells and whistles and I would have to pay extra to view an online copy of the cheque I just wrote to the plumber. Gone are the days were your cancelled cheques came back to you in the mail. Soon cheques will be a memory. I will keep one to show my future grandchildren.

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    Grayson says September 5

    Wow, a plumber not taking a credit card! That is crazy. They are guaranteed the money and they could lose some if checks bounce. I would rather pay the processing fee for a credit card than deal with checks.

    Reply
KK @ Student Debt Survivor says September 3

I have a Capital One 360 checking and savings account (had them both since they were ING). I’ve had nothing but good experiences with Capital One. I really like the check deposit feature (I have the app on my iphone).

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James Molet (SavvyJames) says September 4

While dealing with a bank can sometimes be frustrating, they generally provide valuable services. My bank is a smaller organization that provides good service. I haven’t had any issues with them in the 13 years I have been doing business with them.

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    Grayson says September 5

    I agree here James. They still provide valuable services, but their fee structure is getting out of hand.

    Reply
SuburbanFInance says September 4

I have a free account with ING because, well, who doesn’t like free? I hate paying for things.

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Jack says September 6

I love my checking account, at least the one I have at my local credit union. Very low fees, great service, and access to a worldwide network of credit union ATMs.

So I was disappointed when they tried to gouge me on buying new checks when I opened a new joint account with my wife. I wrote about my best source of inexpensive personal checks on Enwealthen if you want to check it out.

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    Grayson says September 7

    Did the credit union try to gouge you when you went to get checks or your regular checking account. I have accounts with a big bank and with a credit union. They both have purposes.

    Reply
Jack says September 7

We were opening a new joint account together, but we both were already members of the credit union. They just charged twice what I could pay elsewhere, and that didn’t even include shipping & handling.

More details if you’re curious: http://www.enwealthen.com/2013/08/how-to-buy-personal-checks-without-getting-robbed-by-your-bank/

Reply
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