According to the 2021 FDIC National Survey of Underbanked and Unbanked Households, approximately 96% of US adults have a savings or checking account. Checking accounts are one of the most common deposit accounts available, and you can open one at many banks and credit unions. These accounts offer a convenient way to pay bills and track and manage your daily spending.

If you’d like to open a new checking account, here’s what to know about these accounts, how they work, and how to use and manage them effectively.

Understanding checking accounts

A checking account is a deposit account that’s available at numerous financial institutions. Whereas a savings account is often used to set aside money for specific financial goals, a checking account is primarily used for everyday spending. Generally, checking accounts come with debit card access and check-writing privileges, making it easy to access the funds in your account when needed. These accounts often have no or low minimum balance requirements.

While most checking accounts aren’t interest-bearing, meaning your balance won’t earn money, some do earn interest. However, interest rates are typically lower than what you’d see with a savings account. Unlike many traditional checking accounts, interest-bearing checking accounts may require maintaining a set minimum balance to earn interest.

Banks and credit unions sometimes offer special bonuses for opening a new checking account and meeting specific requirements. For instance, if you deposit $1,500 and set up direct deposit to your new account in the first 60 days, your bank might give you $200.

Some checking accounts may come with fees. For example, overdraft and non-sufficient funds (NSF) fees are relatively common, so be mindful of this as you compare options.

Opening a checking account

Opening a new checking account is typically straightforward, but your financial institution will require some information and documentation from you. Here’s what you’ll likely need to provide:

• Name

• Address

• Social Security number (SSN), Individual Tax Identification Number (ITIN), US passport, driver’s license, or another document to confirm your identity

• Utility bill, mortgage statement, or another document to confirm your address

• Opening deposit, which is generally a small amount

Many credit unions and banks let you open checking accounts online, but you could also open one over the phone or in person, depending on the institution. Before you start, look for checking accounts offering bonuses, as a decent bonus could be a relatively easy way to earn some extra cash.

Using a checking account

As mentioned, checking accounts typically come with debit cards and check-writing privileges. Depending on the merchant, you can make payments with both your debit card and checks. Many checking accounts also let you set up online bill pay, one-time or recurring. For instance, you might choose to automatically pay your monthly gas and electric bills from your checking account.

If you need cash, you can withdraw funds from your checking account at a local branch or by using your debit card at an ATM, no matter if the ATM is in your bank’s network or not. But remember that you might pay a fee for using an out-of-network ATM. You can deposit checks and cash into your checking account in person, in-network ATMs, or via mobile deposit (if your bank supports this option).

Managing a checking account

Before online banking’s prevalence, people balanced their checkbooks on paper using a check register each month. With a check register, you write down every payment you make with a check and reconcile your expenses at the end of your statement cycle. While it’s still possible to track check payments this way, getting an accurate picture of your balance is more challenging if you also frequently make debit card payments.

For this reason, many people manage their checking accounts via an online dashboard or bank and credit union mobile apps. These tools allow you to quickly and easily view your balance and track and reconcile your spending through monthly account statements. Mobile apps also offer convenient features like low balance warnings and transaction alerts, which can help you avoid overdrafting your account.

Overdraft and non-sufficient fund fees (NSF) are common with checking accounts, and these fees are generally comparable. For instance, your bank may charge a $35 overdraft fee if you overdraw your account or a $35 NSF fee if you’ve opted out of overdraft protection. These fees typically apply if you make a purchase with your debit card and your checking account balance can’t cover the cost.

Fortunately, managing your transactions effectively and tracking your balance closely can help you avoid fees. For added protection, you can generally link your checking account to another deposit account, such as a savings or money market account. If you accidentally overdraw your checking account, the difference can be taken out of your linked account.

In addition to overdraft and NSF fees, certain checking accounts may also have monthly service fees. These fees are generally small but can still add up over time. Ideally, choosing a checking account with no monthly service fees is best.

Alternatives to checking accounts

Alternative options are available if a checking account doesn’t sound like the best fit for your financial situation. Instead, you may want to consider the following:

• Savings accounts: A savings account may be better if you’d prefer to build an emergency fund, save for a specific goal, or seek a higher interest rate than a checking account provides. These accounts often have monthly withdrawal limits and typically don’t come with debit cards or checks.

• Money market accounts: Money market accounts have rates comparable to savings accounts but come with debit card access and checks. Monthly withdrawal limits may apply with a money market account.

• Prepaid debit cards: Prepaid debit cards are another alternative if you prefer not to open a new bank account. With a prepaid card, you can spend up to the amount you add to the card. Once you’ve spent your card’s balance, you can opt to reload it. These cards can be a useful alternative to cash but typically have high fees.