A 

checking account is a service provided by financial institutions (banks, savings and loans, credit unions,
etc.) which allows individuals and businesses to deposit money and withdraw funds from a federally-
protected account. The terms of a checking account may vary from bank to bank, but in general
a checking account holder can use personal checks in place of cash to pay debts. He or she can also use
electronic debit cards or ATM cards to access individual accounts or make cash withdrawals.

Virtually every bank offers some form of checking account service for their customers. Some may require
a minimal initial deposit before establishing a new account, along with proof of identification and address.
A student or other low-income applicant may opt for a no-frillschecking account which does not charge
fees for the use of personal checks and other services. Others may benefit from interest payments by
maintaining a high minimum balanceeach month. Some states are required by law to provide a
'lifeline' checking account option forsenior 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.

Theaccount 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debited (withdrawn) from the check writer'saccount. This process continues for every check written
against an individual checkingaccount.

Owners of a checking account are ultimately responsible for keeping track of their available funds, even
though the bank will routinely issue its own accounting statements. Checks must represent an actual
amount of money contained in the checking account itself. If a check is written for an amount higher than
theavailable balance, the check writer faces numerous fees and possible legal action. The recipient of
the bad check can demand immediate cash payment for the original debt as well as a substantial fee for
the returned check. Some banks will protect checking account holders by making the proper payments
and notifying the check writer that an overdraft has taken place. Most often the bank will recoup their
losses through substantial service charges, so it pays to avoid writing checks when the balance is
unknown.

Most banks have several different methods which allow checking account customers to check their
balances and reconcile their records. Printed monthly statements of debits and credits (deposits) are
mailed to individual account holders. ATM machines offer an option to check the current balance, while
online or phone-in accounts can provide real time updates on which checks have been processed and
which are still outstanding. This information can be compared with the entries recorded in a journal called
a check register.

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 frompayroll 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.

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