A checking account is one of the main types of bank accounts that you can get from banks and credit unions. Banks and credit unions have various products that you can get from them. These include checking accounts, savings accounts, CDs, money market accounts, retirement accounts, debit cards, credit cards, etc. Butis a checking account an asset? I will discuss that shortly.
You might be wondering what an asset is as we speak. For our understanding, an asset is anything that provides a current or future economic benefit for a person or other entity. Therefore, an asset is something you own or something owed to you. Examples of assets include cash and cash equivalents, marketable securities, trademarks, product designs, patents, distribution rights, and buildings.
Someone with plenty of high-value assets is a wealthy person. Usually, your personal belongings such as houses, land, money in the bank, vehicles, and so on are determinants when applying for loans and lines of credit. Banks and financial companies usually view you as having a high chance of repaying a loan compared to someone with nothing. That way, you can get high limits. After all, if you fail to pay, they will come for anything you put as a guarantee to get their money back.
What is a checking account?
Before we proceed, it is crucial to understand what checking accounts are. Checking accounts are bank accounts that allow you to deposit finances for your everyday use. You can keep finances for your home budget, such as buying food, traveling to your workplace, and sorting out emergency issues such as sickness. The funds in a checking account are usually accessible at any time.
You can get a checking account from a bank or credit union. We have plenty of banks with free checking accounts with no deposits that you can get today. Some online money transfer services also issue checking accounts to eligible citizens. An example is Chime which offers a checking account called Chime Spending Account.
Checking accounts come with debit cards that you can use to withdraw money at ATMs, buy goods online and at physical stores, and make bill payments. The cards allow you to spend your checking account balance without directly using the funds. They offer convenience, especially for accounts that do not have online banking or mobile app options.
Furthermore, checking accounts allow you to write checks. Checks are written and signed documents that allow someone or a company to get money out of your account. If you write a check to someone, they can withdraw funds from your account by depositing the check in a bank, credit union, or any other applicable financial company.
You usually get a checkbook for your transaction activities when you apply for a checking account. The checkbook helps you keep proper records of your spending. I suppose up to that point, the question “what is a checking account” is now unanswered correctly.
Who can open a checking account?
You can get a checking account if you are over 18 years old. That means you are an adult with the proper documentation. School-going children can also open bank accounts to cater to their school expenditures. That way, they will be able to pay for their school fees and other essential learning materials.
When a teen under 18 years old opens a checking account, most financial companies require their parents or guardians to accompany them. That means the guardian’s or parent’s details are necessary. Once they get their account, you are expected to control how they spend money as a parent or guardian.
Most financial companies allow you to restrict teens’ debit card usage. We all understand that if teens are left to decide how to use their funds, they can waste them by buying unnecessary items.
What do you require to open a checking account?
There are various requirements you need to open a checking account. They include the following.
- An identification document such as the State ID, passport, and driver’s license.
- A Social Security Number (SSN).
- An email address
- A phone number
- Physical address
Some financial institutions may also request you to provide an external bank account for your first deposit. If you open an account online, there is nowhere to deposit cash. The identification document ensures that only genuine individuals open accounts. If not checked, criminals such as terrorists, money launderers, and human traffickers can open accounts and fund their unethical activities.
The phone number is essential when it comes to communication. The financial institution you have an account with can contact you when needed. The same applies to the email address. You can also receive monthly statements at your email address and download them for viewing.
You might be wondering why some financial companies require all these details. That is because the federal government directs them to do so in an attempt to combat terrorism and other crimes in society that require funding.
How do you open a checking account?
Suppose you want to get a checking account with a particular bank or credit union. In that case, you must check how they accept applications first. Some accept online account applications, while others require you to visit their brick-and-mortar offices for applications. Others allow you to open an account using either method.
After deciding on the method to open an account, you need to gather all the necessary details. I have discussed all you require to open a checking account there. And by the way, you can open a free online checking account with no opening deposit from most financial companies. You only need to open the account and then return another time to deposit money.
When opening your account, you will need to fill in various details such as your full name, identification document type and number, SSN, email address, phone number, Zip code, and other important information. Once your bank or credit union accepts your account application, you can then proceed to use it. Remember that you can request a debit card when applying for your account.
Is a checking account an asset?
A checking account is an asset. Remember what I discussed about assets, whereby I defined them as anything that provides a current or future economic benefit for a person or other entity. Since you own the money in the checking account, then the account is your asset.
Most people prefer putting money in their checking accounts to access it anytime they need it. Savings accounts restrict users on the number of times they can get money out of their accounts and are thus not convenient. Furthermore, some financial companies allow you to earn interest when maintaining a certain balance in your checking account. That way, your assets increase one by one.
Other types of accounts are also assets and not just checking accounts. If you have a savings account, IRA, brokerage account, and so on with your bank, those are some of your assets. If you were thinking of assets like vehicles, animals, land, and so on, then now you understand what you can call an asset.
How to use a checking account?
Once you open your account, it is crucial to understand how to use it. There are various ways you can use your checking account, and they include the following.
1) Sending money
You can send money with a checking account number instantly to other accounts within your branch. However, when sending money to an account in another branch or a different financial company, you will need to use the account and the checking account of the recipient. The transfer can cost some fees, although not that much.
You can also add your bank account to mobile wallets such as PayPal, Venmo, and Cash App, and send money to others. The bank account acts as a source of money for your account.
2) Pay bills
Another everyday use of a bank account is to pay bills. These include electricity, water, internet, and so on. You only require the service provider’s account details. You can transfer funds to their accounts either online or at physical branches. Interestingly, most financial companies allow you to set up automatic bill payments so that you do not have to remember all the time.
3) Receive money
You can receive funds from others using your checking account. You only need to provide your account number and the routing number where necessary and receive funds. Suppose you are employed or receive certain government benefits. In that case, you can easily set up a direct deposit to receive finances in your account.
4) Earn interest
Some checking accounts allow one to earn interest when maintaining a particular interest in your account. Your money can bring you something instead of lying there idle.
A checking account is a particular bank account that allows you to deposit money for your everyday use. The account comes with a debit card to help you access money from your account when paying for items or withdrawing at an ATM. Your checking account is an asset since you own it. An asset is something that you own or something owed to you. You can open a checking account online or at a branch.=