Opening A Checking Account

Banking for Students

Published Fri, May 1 2020 at 10:26 PM PT
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By Obioha Okereke

What is a checking account? How do I open a savings account? What bank should I choose?

These are some of the questions you might ask as you think about opening a bank account. Let’s start by going over some of the basic bank accounts.

Checking Accounts

A checking account is a bank account used for your everyday expenses. Checking accounts allow for daily deposits and withdrawals. Generally, you should leave enough money in your checking account to cover regular expenses and bills. IT SHOULD NOT BE USED AS A SAVINGS ACCOUNT.

Deposit = When you put money in your account

Withdrawal = When you take money out of your account (can be done via bank transfer, ATM, or in-person)

Setting up a checking account is easy and can be done online, or in-person at a local bank. When you have a job, you can set up direct deposit so that all your paychecks are directly deposited into your account. Similarly, you can link a checking account to Venmo, Cash App, and Paypal, to transfer or spend money.

Note: You can also write checks from a checking account.

Spend Money Responsibly

It is important to be mindful of your spending so that you do not overdraft on your account. Overdraft occurs when the amount you charge to a debit card, or spend on an account, is greater than the amount in your bank account.

For instance, if you have $200 in your account, and buy a $300 plane ticket, you will overdraft and your account will carry a negative balance. It is important to setup alerts so you know when an account is low, or when it overdrafts. Many banks charge overdraft fees so it is crucial that you monitor your spending.

A debit card is plastic, bank-issued card, that is linked to your checking account and enables you to spend money easily regardless of where you are in the world. When you spend money using a debit card, the amount is immediately withdrawn from your checking account.

Now that you a know a little bit about opening a checking account, overdraft fees, and debit cards, I think you’re ready to open a checking account.

As you begin to look for where you should open a checking account, be sure to consider the following:

  • How much money would you like to keep in the account?

  • What do you need the account for?

  • Do you qualify for any special accounts? Some institutions offer student checking accounts.

  • What type of accessibility will you have? Will there be numerous ATM locations that you can use to withdraw money?

Also, be sure to compare checking accounts at different banks to get a good sense of what might be best for you.

Want to learn more? Check out Investopedia’s The Complete Guide to Checking Accounts