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Different types of checking accounts

By Andrew Freiburghouse | Money Rates Columnist

Choosing the right kind of checking account for your needs can be daunting today because there are so many options. To make the process easier, here is a breakdown of some of the different types of checking accounts available today.

Checking accounts: plenty of choices

Once upon a time, there were very few different types of checking accounts. But options have proliferated in recent years:

  • Online checking accounts Online checking accounts come from banks that forgo having a traditional branch structure, like Mutual of Omaha.  These types of checking accounts frequently include electronic bill pay and direct deposit and best of all, they're often free. But look for a quick demo of a bank's website before committing. Some are easier to use than others. Likewise, ask questions about the bank's online security systems and customer service too. The best online banks feature robust features in these respects, so shop around.
  • Second-chance checking accounts Second-chance checking accounts are for those who have had banking issues in the past -- for instance, those who can't get an account today because they've bounced too many checks in the past. You'll have to pay higher fees than "gold-star" customers, but they can still beat having no account at all.
  • Business checking accounts Because banks anticipate selling business owners other products, such as loans, business checking accounts often come with great deals -- some are even free. Business checking accounts also have built-in features to track and record business expenses. Plus, with a dedicated account, you can keep your business and personal expenses separate.
  • Interest-bearing checking accounts Interest-bearing checking accounts are a good choice for people who maintain higher balances, because with this type of account, the higher your balance, the higher the interest rate that the bank pays you. However, read the fine print on these: If you don't maintain that high balance, you may be charged extra monthly fees.
  • Express checking accounts If you don't go inside the bank anyway, an express checking account can provide you with ATM access, unlimited check writing and personalized checks, all for no monthly fee. Many young people love these accounts, but if you do need to see a teller, you may have to pay a per-visit fee.
  • Free checking accounts Free checking accounts are popular with all types of people and are a big customer acquisition tool for major banks. On the upside, they're free. On the downside, they don't pay much interest, if any. Often, the basic account is free, but if you want to gain more perks, you may be charged a fee for the upgrades.
  • Lifeline checking accounts Lifeline checking accounts are checking accounts for lower income people who might otherwise be left out of the banking system. Usually, lifeline checking accounts are characterized by low monthly fees and a limited number of checks per month.
  • Student checking accounts These accounts cater specifically to the needs of students, typically through lower balance requirements and fewer fees. They also typically offer options for debit cards and online banking, which are necessary features for many younger consumers.
  • Senior checking accounts Banks like having senior citizens as customers, so they offer senior checking accounts with various bonuses or specials to attract the older crowd. These programs vary by bank, and may include such benefits as free checking, free traveler's checks or even discounts on prescription drugs.
  • Joint checking accounts Every husband and wife needs a joint checking account, but you don't need to be husband and wife to get one. Both people just have to sign on the dotted line, and agree to be mutually responsible for the account.
  • Money market checking accounts Money market checking accounts boast higher interest than most checking accounts, but may require a minimum balance and allow only a limited number of checking-account transactions per month.

When it comes to regular spending, there is little wisdom in walking around with wads of cash that can be lost or stolen. Checking accounts offer a more convenient option, and they're necessary for conducting many types of everyday business today. And with the wide selection available today, there's are very few reasons for anyone not to have one.

To view some of today's top accounts, please visit MoneyRates.com's checking account listings.

Your responses to ‘Different types of checking accounts’

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Mona

16 February 2012 at 1:09 pm

I am a teacher and this was a very understandable description of the different kinds of accounts that I can share with my English language learners.

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