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Checking account

A checking account is a deposit account opened at a bank that allows making numerous withdrawals and unlimited deposits. Checking account is the most liquid account and can be easily accessed at any time using ATMs, checks, online banking, credit or debit card. Due to its characteristics, checking account is also known as demand or transactional account.

Many financial institutions offer checking accounts for very low monthly or annual fees and traditionally banks use this service as a loss leader. The loss leader is a term in marketing, which includes offering a product below its market value in order to attract consumers. When the consumers have been attracted with free or low-cost checking accounts, banks offer them more profitable products, such as mortgages, personal loans, investments in life insurance or retirement funds.

Functions of checking account
Different types of checking accounts have been designed in order to meet the requirements of the users. They can include student accounts, business accounts, as well as joint accounts for households. Generally, checking accounts do not offer any interest return due to its liquidity.

Checking accounts are easy to set up at bank branches for a private individual. For businesses, you might be required to go through a certain procedure depending on the bank rules and state regulations. Checking account is one of the most practical solutions for keeping your cash available for any transactions, such as paying your bills, purchasing goods online, as well as paying with a credit or debit card in a store. Demand account is the most simple bank service and is used by almost every bank customer in the world. This account gives you a freedom and convenience when accessing your funds immediately and without any extra charges, except transaction fees in some cases.

Some banks offer checking accounts with a certain credit limit, which you can use in case of an emergency. If this is the case of your transactional account, you can be restful that you have an access to some extra cash at any time. Meanwhile, you should be more careful in order not to exceed your balance without an important reason. Typically, this short-term credit is tied to huge interest. For some people, who like spending all accessible cash, checking account with credit line might not be the best option.