- March 3, 2021
- Posted by General Electric Credit Union
- 5 read
5 Types of Checking Accounts Explained
A checking account is designed to provide easy access and management of your money. Having one is vital to keep track of your money and manage your income and expenses. With most checking accounts, you’re able to: access and transfer money from an online banking or mobile app, use a debit card, write and deposit checks, withdraw money from an ATM, customize account alerts for low balances or large deposits, and pay bills. Not all checking accounts are created equal, and there are several options to choose from. You can feel confident that your checking account selection meets your financial needs by reviewing the following options and identifying which features and perks are the most important to you.
Common checking account types to consider
1. Standard checking accounts
A standard checking account is the most basic of checking accounts and is found at just about any credit union or bank. Many standard checking accounts are unlikely to earn interest, so you won’t earn money on your balance. You may also be required to maintain a minimum balance to avoid a monthly fee. Depending on the financial institution, some have features, like: debit card rewards, a large network of ATMs, free online banking and mobile app, overdraft protection, and free access to your FICO® Score.
2. Free checking account
Free checking accounts are less common and becoming more difficult to find. A free checking account doesn’t have a monthly maintenance fee or require a minimum balance, and you’ll still have access to many of the account management features you’ll find in a standard checking account, such as Online Banking and a mobile app. You may be required to pay for services, such as: out-of-network ATM fees, overdraft fees, stop payment fees, and foreign transaction fees; take a moment to review the account details before selecting an account. Finally, many free checking accounts don’t earn interest, as you’re already avoiding monthly maintenance fees.
3. Interest checking account
An interest checking account is a checking account that pays interest on your deposits in exchange for maintaining money in the account. The amount of interest you’ll accrue depends on the annual percentage yield (APY) and, in some cases, the account balance. For the latter, this is because some accounts offer tiered interest rates. This can grow your account balance considerably, given most checking accounts don’t earn interest. Additionally, it’s common for these types of accounts to have a monthly fee, but if you maintain the minimum balance, this fee is typically waived. Be mindful though, as the cost of the monthly fee can outweigh the earned interest. Only select this type of account if you know you’ll maintain the necessary balance to avoid the fee.
4. Premium checking account
A premium checking account, or a high-yield checking account, offers added account benefits and accrues interest based on your balance. Compared to an interest checking account, this feature-rich account often waives fees (ex. out-of-network ATM or foreign transaction fees) and has an even higher annual percentage yield (APY) and balance requirements. If you maintain a high balance, it’s a simple way to earn interest on your money without lifting a finger. And, unlike high-yield savings accounts, you don’t have to worry about withdrawal limitations.
5. Business checking account
Business checking accounts are used to keep business finances separate, making it easier for financial record keeping when tax filing season rolls around each year. Many business checking accounts offer a Business Online Banking service, which provides business banking features that aren’t offered in standard Online Banking services, such as: Remote Deposit Capture, Online Wires, Check Positive Pay, and more.
- Tip: Just like standard checking account types, there are various business checking account options. When deciding, review: the number of transactions you make in a month, the account’s cash deposit limits, and the account’s minimum balance requirements, among other features.
A checking account is the foundation of your financial life and essential to managing your finances efficiently and effectively. Finding the right one will require you to evaluate your financial needs and compare the different checking accounts available. At General Electric Credit Union (GECU), we offer checking accounts that work with every financial situation, whether you: want to earn interest, need an account for personal or business reasons, or just want a simple, low maintenance account. Our checking accounts were created to include best-in-class solutions, like: free access at 57,500+ ATM locations nationwide,1 free Overdraft Protection Transfers,2 Round-Up savings program,3 free eStatements, touchless payment solutions with Apple Pay®, Google PayTM, and Samsung PayTM, Online Banking, and our top-rated mobile app.