| A checking account is a bank account which allows bank customers - both individuals and businesses - to make a deposit and debit funds from an account at any time. Different banks apply different terms for a checking account, but in general checking account holders can use personal checks instead of cash to pay debts. ATM cards and debit cards can also be used to access an account or make cash withdrawals.
Virtually every bank offers some form of checking account service. Some may require an initial deposit before opening a new account, along with proof of identification and address. A student or other low-income applicant may open a no-frills checking account where personal checks and other services are free. Others may derive benefit from interest rate payments by maintaining a high minimum balance each month.
A typical checking account is managed through careful posting of deposits and withdrawals. The account holder has a supply of official checks which contain all of the required routing and posting information. When a check is filled in appropriately, the recipient can deposit it into his or her own bank account. A bank employee then files the check electronically and the check writer's bank receives the cancelled check and amount to be debited from the check writer's account.
Owners of a checking account should keep track of their available funds, although the financial institution will routinely issue its own accounting statements. Checks must represent an actual sum contained in the checking account itself. If a check is written for an amount higher than the available funds, the check writer will be charged numerous fees. The recipient of the bad check can demand immediate cash payment for the original debt and a fee for the returned check. Some banks will protect checking account owners by making the proper payments and informing the check writer about the overdraft. Often the financial institution will recoup their losses by charging for services offered, so it is better to avoid writing checks when the balance is unknown.
Most banks have different techniques which enable checking account owners to check their balances and reconcile their records. Monthly statements of debits and deposits are mailed to checking account owners. ATM machines provide an option to check the balance, while phone-in or online accounts can render real time updates on processed and still outstanding checks.
For more information about checking accounts, please visit www.checkingaccount.ca. |
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