Set Up Your Checking Account

A checking account is where your money goes in and out for everyday expenses like shopping bills, groceries, and dining out. It offers convenient and quick access through debit cards, checks, and online transfers. But there is a downside - checking accounts usually don't earn interest. In other words, your money is just sitting there, not working for you nor earning. You use a checking account for its liquidity, meaning it is very easy to draw money out instantaneously, not for any financial gains. 

I said checking accounts don’t offer interest usually but there are exceptions. Some checking accounts offer higher interest rates, but there's a catch: you might need to keep a high balance or swipe your debit card a certain number of times each month to qualify. For example you might need to keep $500 minimum at all times in that account, or you might have to use the card at least 40 times during the month (these figures are purely an example). 

If you open a checking account at a bank, the Federal Deposit Insurance Corporation (FDIC) protects your money up to $250,000 per individual depositor (per person essentially). So, even if your bank fails, your money is safe as long as it’s within those limits. Or if it is with a credit union, your money is protected by the National Credit Union Association (NCUA) - same coverage, same safety.

To keep things efficient, limit your checking account balance to what you need for immediate expenses and channel the rest toward other types of accounts that actually help your wealth grow. I will cover those in upcoming articles. ¹

References:

¹ Egan, J. (n.d.). What is a checking account? here’s everything you need to know. Investopedia. https://www.investopedia.com/terms/c/checkingaccount.asp