When to Open a Checking Account

Before a global pandemic accelerated adoption of all things virtual, our world was already shifting toward a paperless society. From e-commerce and digital wallets to direct deposit and online bill pay, much of our financial life is now conducted online.

That’s not to say you won’t ever stand in line behind someone who is paying for their groceries by paper check, but the odds are good that those times are rare.

With many of our financial responsibilities now being handled electronically, many people are questioning whether traditional banking services, such as checking accounts, are still necessary. The short answer is “Yes,” but, like so many other parts of our lives, checking accounts are evolving to keep pace with today’s demand for digital.

Let’s take a closer look at why checking accounts are still relevant, when you should open one, and how a checking account can improve and empower your personal finances.


How a Checking Account Is Different from Other Types of Bank Accounts

Most banks offer a wide variety of services, from auto loans to retirement planning. However, the majority of bank customers use their financial institutions to manage their money.

Many banks offer several different types of accounts in addition to checking accounts, including savings, money market, and certificate of deposit (CD). Each of these accounts can be used to achieve specific financial goals. 



A checking account is the type of account many people use to manage their day-to-day cash flow. For example, paychecks are deposited, bills are paid, and debit cards pull funds for purchases from your checking account.



Unlike a checking account, money doesn’t flow as freely through a traditional savings account. These accounts are intended to provide a place to deposit money and let it sit for a longer period of time to earn interest.


Money Market

Money market accounts are similar to regular savings accounts but with the potential to earn more interest. The tradeoff is that money market accounts normally have a minimum deposit or balance and a cap on how many withdrawals you can make each month.


Certificate of Deposit

Certificate of deposit (CD) savings accounts differ from other accounts in that they require you to keep your money in the account for a specific amount of time. You can choose to deposit your money in a CD for six months, one year, five years, or even longer. The longer the term of the CD, the higher the interest you earn on your money.


When Is the Best Time to Open a Checking Account?

There is no one “right” time to open a checking account, but most people do so for one of a few common reasons. 


You want to give a child an early introduction to money management.

Some parents or grandparents opt to open a checking account for the children in the family to start teaching them about money management at a young age. By starting early, you can help lay a foundation for good financial habits when your children are adults.


You’re starting your first job.

Many people don’t have a need for a checking account until they start generating an income. A checking account provides a place for your employer to deposit your paycheck and allows you the convenience of paying for goods and services with a debit card. 


You (or your child) are college-bound.

College students have a lot of expenses, so it makes sense to open a checking account before heading off to school. Electronic money transfers make it easy for parents to replenish funds as needed and for students to learn important money management skills.


You want to earn rewards or cash back on purchases.

Many banks offer customer incentives for banking with them, such as cash back or points awarded for dollars spent that can be redeemed for goods, gift cards, travel, or other items.


You want to simplify your budgeting.

Your checking account can be used as a central hub for your finances that provides full visibility into your income and spending. With all of your information in one place, it’s easier to set a realistic budget and stick to it.


You want to enjoy the convenience of electronic banking and bill pay.

Once upon a time, we mailed checks to pay our bills and used paper check registers and monthly bank statements to keep track of our finances. Today, we simply jump online or open an app to send payments with a few clicks or monitor our account balances down to the minute.

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Types of Personal Checking Accounts

Checking accounts aren’t one-size-fits-all. What works well for one person may not be ideal for another. Fortunately, most banks offer several types of personal checking accounts that are designed to meet each customer’s specific needs. Below is an overview of some of the most common types of personal checking accounts.


  • Traditional: These accounts provide standard options like online banking, debit cards, and electronic bill pay. There may be a monthly service fee associated with this type of account that can be reduced or waived if certain criteria are met.

  • Interest-bearing: An interest-bearing checking account might be a good option if you carry a high balance in your checking account. However, it’s important to do your homework because the interest earned on your balance might not exceed the monthly fees you pay.

  • Student: Available to students through college age, these checking accounts provide all the benefits of a traditional checking account but without monthly fees or minimum balance requirements.

  • Senior: Available to customers over age 55, these checking accounts are similar to traditional accounts but offer special features like no overdraft fees, no minimum balance or service charges, and free checks.


Benefits of Opening a Checking Account

Now that we’ve looked at what checking accounts are, let’s explore the “why.” Here are the top five reasons opening a checking account is a smart financial choice.



It’s much easier to keep your money safe when it is securely stashed in a checking account rather than in your wallet. You don’t have to worry about dropping cash, losing your purse, or being the victim of theft.

Checking accounts provide additional peace of mind because balances up to $250,000 are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Association (NCUA).



The introduction of debit cards eliminated the need to always have cash on hand for purchases. Today, mobile and digital wallets are making buying even more convenient by allowing customers to make purchases using a smartphone.   


Money Management

Online banking has revolutionized how we receive our paychecks, monitor our spending, and pay our bills. With 24/7 instant access to our accounts, it has never been easier to manage money efficiently.  


Credit Building

Keeping money in your checking account, paying your bills on time, and avoiding overdrafts are great ways to build credit. A well-managed checking account signals to lenders that you are a good risk for a mortgage, car loan, or credit card.



High-yield or interest-bearing checking accounts require you to maintain a high balance in your account, but the interest you earn on that balance can be significant.


How to Get the Most Out of Your Checking Account

Today’s checking accounts are designed for the digital age. To ensure you get the most value and convenience from your account, opt in to features and functions like:

  • Electronic statements
  • Direct deposit
  • Mobile and online banking
  • Low-balance alerts
  • Automatic bill pay


Using a Checking Account to Support Your Budget

In a challenging economy, making your money stretch is essential. Your checking account can help you set and stick to a monthly budget. 

Here are a few budgeting tips to help you get started.


Keep it out of sight and out of mind.

Keep just enough money in your checking account to cover bills and necessary expenses. If the money isn’t in your checking account, it’s harder to spend it on nonessentials.


Separate discretionary money and expenses.

Place bill money in one checking account and “mad” money in another. This helps ensure your monthly financial responsibilities are taken care of and you know how much discretionary money you have left for the month.


Use low-balance alerts to avoid overdrafts.

Turn on alerts to be notified when your checking account balance reaches a specified amount. This lets you know to watch your spending so you don’t get hit with overdraft fees.


The Time Is Always Right to Open—or Optimize—Your Checking Account

Whether you are exploring checking account options or looking for ways to get the most value out of your existing account, First State Community Bank can help.

As a community bank, we work at the local level to provide services that meet our customers’ needs. We look forward to working with you to find a checking account option that is right for you. 

Remember: a checking account isn’t just for direct deposit and buying groceries. It can also be an important tool for creating and sticking to a budget. Download this free resource, A Complete Guide to Budgeting, to learn more ways to build a budget that will help you reach your financial goals.


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