| A checking account is a service provided by financial institutions which allows bank customers - both individuals and businesses - to put money and debit it from an account at any time. Different banks and other financial institutions apply different terms for a checking account, but generally checking account holders can pay debts using personal checks instead of cash. ATM cards and debit cards can also be used to access an account or withdraw cash.
Virtually every bank offers some type of checking account service for their customers. Some may require an initial deposit before establishing a new account. A student or other low-income applicant may decide on a no-frills checking account where personal checks and other services are free. Other clients may gain benefit from interest rate payments by sustaining a high minimum balance each month.
Normally, a checking account is managed through thorough posting of debits and credits. The checking account holder has a supply of official checks which contain all of the required routing and mailing information. When a check is filled out appropriately, the recipient treats it the same as cash and completes the transaction. After the recipient deposits the check into his or her own bank account, a bank employee files the check electronically and the check writer's bank receives the cancelled check and amount to be withdrawn from the check writer's account. This procedure continues for every check written against an individual checking account.
Owners of a checking account should keep track of their balance, even though the bank will regularly make its own accounting statements. Checks must represent an actual amount contained in the checking account itself. If a check is written for an amount of money higher than the available funds, the check writer faces numerous fees and possible legal action. The recipient of the 'bad' check can demand instant cash payment for the original debt and a fee for the returned check. Some banks will protect checking account holders by making the appropriate payments and notifying the check writer about the overdraft. Often the bank will recover their losses by charging for services rendered, so it is better to avoid writing checks when the balance is unknown.
For more information on checking accounts, visit www.checkingaccount.ca. |
