A checking account is a service done by financial institutions (credit unions, banks, etc.) which lets individuals and businesses deposit money and take out funds from a federally-protected account.

The terms “checking account” can vary from one bank to another, but in general a checking account owner may use personal checks instead of cash to pay off loans anddebts. He or she may also use virtual debit cards or ATM cards to access personal accounts or make money withdrawals.

Most banks offer some form of checking account service for their clients. Some banks require a minimal initial deposit before establishing a new checking account, along with a proof of identification and the address of the client.

Student and other low-income applicants may choose a no-frills checking account that doesn’t charge fees for the use of personal checks and other services. Others may benefit from interest payments by maintaining a high minimum balance each month. Some states are required by law to provide a ‘lifeline’ checking account option for senior citizens and low-income customers. This type of checking account waives many of the fees banks may charge, such as monthly service fees for low balances and surcharges for ATM usage.
A typical checking account is handled through careful posting of deposits and withdrawals. The account holder has a supply of official checks which contain all of the essential routing and mailing information. When a check is filled out correctly, the recipient treats it the same as cash and completes the transaction. After this check has been deposited into the recipient’s own bank account, a bank worker files the check electronically and the check writer’s bank receives the cancelled check and amount to be debited (withdrawn) from the check writer’s account. This process continues for every check written against an individual checking account.

As long as the account holder maintains accurate financial records, a checking account provides a safe and efficient way to pay bills and deposit money from payroll checks and other income sources. A savings account may pay more interest over time, but a checking account replaces the need for large amounts of cash to satisfy routine debts such as rent or mortgage payments, credit card bills and utility bills.

Learn about the advantages of opening a checking account online:
Opening a savings account, checking account, money market account or a Certificate of Deposit online is easy, reliable, and quick. Most banks have a simple and secure online application form that guides you through the process. They are also available to help you at any time should you have a problem.

Here are the benefits of applying for an online bank account:

• Its easy to open a bank account online
• Its fast – you can complete your online application in as little as 10 minutes
• Call for assistance anytime during the process
• Save your application and return later if you need more time
• Online bank will receive your application and set up your account, typically in 24 hours
• Take advantage of Online Banking and Bill Pay, giving you 24/7 access to your accounts as well as saving you money in postage by paying bills online!

A savings account usually refers to an account where one places cash to earn a percentage interest on it. Unlike an IRA or a 401k plan, the savings account funds are generally easily accessible, even though some financial institutions do charge for taking out money early. In the majority of cases, people can withdraw money from thier savings account at any time; either through the bank (when its open) or by accessing the bank’s ATM.
The term “bank” is used here as a general term for any bank account issuing institution. Not only banks, but also money market fund companies and credit unions cmay offer a savings account to their customers. In addition to earning interest on your money, a savings account also provides a safer place to hold your money, much more secure than stowing it under the mattress or at the bottom of the cookie jar.

An online savings account is an increasingly popular option. There are advantage and disadvantages to keeing your savings account with an online-only bank. Here are a few of the important points to keep in mind:

• Fees. The costs to maintain an online bank are sometimes much lower than the cost to operate a traditional bank. This can translate to lower fees for the bank’s clients (although this is not always the case for all online banks).
• Savings interest rates. For the same reason, you can sometimes find better interest rates with online banks. You will want to compare savings interest rates online to find the highest rate.
• Transferring money. When you use an online savings account, it can take a day or two to transfer funds to other accounts. While this is inconvenient in some ways, it also helps to prevent impulse spending. This makes saving easier!

How does a money market account work?

Money market accounts let you access your money at any time, but they will usually have restrictions on how often you can access your account (for example, up to three times a month).

Money market accounts can also require you to keep a certain minimum balance to avoid extra fees.

Knowing that customers’ deposits in money market accounts are going to be fairly stable gives banks and financial institutions a better ability to turn around and invest these money market funds in short-term fixed-income financial vehicles (also known as “money market instruments,” hence the name of the account).

This extra investment ability of these banks pays off in the form of higher returns on their investment, which the bank may pass along to you, the customer.

Free checking account

This is the best checking account for the majority of people in most cases. Free checking is another way of saying “no monthly service fees or per-item charges regardless of the account’s balance or  its financial activity.”

This means you may write all the checks you want, keep your balance as low or high as you want, and you wont need to worry about paying any fees. You will still need to pay a fee if your check bounces or you fail at some other criteria (like making an overdraft, etc).

Interest bearing checking account

Generally requires a minimum balance to open. After, you may need to keep an even higher balance to avoid extra charges. The minimums balances can often be in other accounts where you pool balances.

Joint checking account

An account owned by two or more people. Each co-owner has equal access to the account. Most types of accounts, whether it’s basic checking, savings or money market, allow for joint use.

Lifeline checking account

A “basic” account meant for people who have a low income. These accounts usually have monthly fees ranging from zero to $6; require a low, if any, minimum deposit and balance; and allow the user to write a certain number of checks per month. According to Bankrate.com, banks are required by state law to offer Lifeline checking accounts in Illinois, Massachusetts, Minnesota, New Jersey, New York, Rhode Island and Vermont. In those states, minimum terms, fees and conditions are set by law, not by individual banks.

Money market checking account

Often found at brokerages like Fidelity, Schwab and Vanguard. These combine checking with a money market fund to get higher interest. It requires a high minimum deposit to open, higher balances to avoid fees and imposes tighter limits on checking transactions than other accounts. Some have a minimum check size of $250 so these are not meant for paying bills.

Senior/student checking account

Senior/student checking are any of the above with special provisions attractive for seniors and students.

Before you ever deal with any bank of any type, in person or online, make sure to double check that they have FDIC insurance and that they’re a real bank.

That being said, all of the banks on our website have FDIC insurance, are legitimate and have been in the banking business for quite a  few years. These are well known banks, but their names may not sound familiar to you (unless you read a lot of personal finance books and websites).
One thing you always need to be make sure of when dealing with high yield savings accounts is to find out whether or not the bank has some hidden charges or fees. The ones on our website don’t, but there are some banks out there that could offer you a high interest rate because they know they can sneak a few charges here and there in their system to make up for their luxurious offer. Always keep an eye out for those sorts of tricks, especially when there are so many banks out there fighting for your business.
There you have it, this website lists top online banks according to both our experience, our research, and the above online bank account tips. I hope this information was useful to you in finding the best online bank for you!

For example, you may decide that you will choose a savings account based on:

• Savings account interest rates
• Online banking features and ease
• Is the account free and whether they can waive their monthly fee with a minimum balance
• Long history of bank being in business, and strong bank brand name and reputation

If the most important feature to you is that your future savings account offers a high yield interest rate, a good way to narrow down the field of offers is to compare savings account rates online in order to find the highest rate offered.

Think of money market accounts as a happy middle between CDs (certificates of deposit) and savings accounts.

While money market accounts will usually put more restrictions on accessing your cash than savings accounts, money market rates and interest rates are actually similar to short term CD (certificate of deposit) rates – without locking up your cash for a long period of time, as CDs do.

Money market accounts are perfect for deposits you don’t expect to access frequently but that you want have access to to when you need it.

For example, if you are just starting a savings plan and need an account to hold scheduled deposits but expect to take out the money only rarely, then a money market account is a great choice. Money market accounts are also a good choice for emergency funds or home down payment funds.

• A CD, certificate of deposit,  is a time locked savings deposit made by the purchaser and held by a bank in return for interest rate.
• Unlike a regular savings account, with a CD, you commit to depositing your money for a certain term (a certain period of time).
• Throughout that term (period of time) you earn a predetermined interest rate, paid out at predetermined intervals.
• However, cashing out your CD account early (before the maturity date comes / before the term ends) will usually trigger an early withdrawal fee and a loss of interest payments.
• A CD offered by an FDIC insured bank is a safe investment, protected up to standard FDIC limits – currently $250,000 per depositor per bank.