Jeffrey Wade
If you have a checking account, you can easily deposit and withdraw money, write checks, pay bills, and make purchases using a debit card. Checking accounts are held through a financial institution, like a traditional bank, online bank, or credit union. Most traditional checking accounts have a monthly service fee, but there are usually ways to waive this fee if certain requirements are met. Checking accounts held by traditional banks are usually insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC protects your money in deposit accounts up to the maximum allowable amount in the event the bank fails. You don't have to do anything to be eligible for FDIC insurance—as long as your deposits are held by an FDIC member bank, you're automatically covered. So, is your Chase checking insured?
| Characteristics | Values |
|---|---|
| What is a checking account used for? | Day-to-day transactions, deposits and withdrawals |
| How can you access your money? | In-person withdrawals, a debit card, bank wire transfers, writing checks, or ATM |
| Are there different types of checking accounts? | Yes, including student accounts and premium accounts |
| Do checking accounts have a monthly fee? | Most traditional checking accounts have a monthly service fee, but it can be waived if certain requirements are met |
| Are there other fees? | There may be fees for out-of-network ATMs, checks, and overdrafts |
| Do you need a minimum balance? | Not all accounts require a minimum balance to open or maintain the account |
| Are checking accounts insured? | Most checking accounts held by traditional banks are insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC protects your money up to the maximum allowable amount in case the bank fails. |
| What do you need to do to be eligible for FDIC insurance? | Nothing! As long as your deposits are held by an FDIC member bank, you’re automatically covered. |
| Can you earn interest on a checking account? | Certain types of checking accounts earn interest, but most do not. |
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What You'll Learn
FDIC insurance protects your money if the bank fails
FDIC insurance covers depositors' accounts at each insured bank, dollar-for-dollar, including principal and any accrued interest through the date of the insured bank's failure, up to the insurance limit. FDIC insurance covers various types of banking products, including checking accounts, savings accounts, money market deposit accounts (MMDAs), and certificates of deposit (CDs). FDIC deposit insurance only applies when a bank fails. It does not apply to lost or stolen prepaid cards or if the prepaid card provider declares bankruptcy.
FDIC deposit insurance coverage is calculated dollar-for-dollar, including principal and any interest accrued or due to the depositor through the date of default. For example, if a customer had a CD account in her name with a principal balance of $195,000 and $3,000 in accrued interest, the full $198,000 would be insured. FDIC insurance covers depositors' accounts at each insured bank, up to the insurance limit of $250,000 per depositor, per ownership category. If you have multiple accounts at the same bank, your coverage may vary depending on the ownership categories of your accounts. For example, if you have a single ownership account and a joint ownership account at the same bank, you will be insured for up to $250,000 for your single ownership account deposits and separately for your ownership interest in the joint account.
It's important to note that not all financial products at a bank are covered by FDIC insurance. Investment products that are not deposits, such as mutual funds, annuities, life insurance policies, stocks, and bonds, are not covered by FDIC insurance. Additionally, money sent to a non-bank company is not FDIC-insured unless and until the company deposits it in an insured bank. To calculate your specific deposit insurance coverage, you can use the FDIC's Electronic Deposit Insurance Estimator (EDIE) tool, which allows you to input your account information to determine your coverage.
In the event of a bank failure, the FDIC responds in two ways. First, as the insurer of the bank's deposits, the FDIC pays insurance to depositors up to the insured limit, typically within a few days after a bank closing. Second, the FDIC assumes the task of selling or collecting the assets of the failed bank and settling its debts, including claims for deposits in excess of the insured limit. Depositors with uninsured funds may recover a portion of their money from the proceeds of the sale of the bank's assets, although this process can take several years.
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You don't need to do anything to be eligible for FDIC insurance
FDIC deposit insurance protects your money in deposit accounts at FDIC-insured banks in the event of a bank failure. FDIC insurance covers deposits in all types of accounts at FDIC-insured banks, but it does not cover non-deposit investment products, even those offered by FDIC-insured banks. FDIC deposit insurance also doesn't cover the default or bankruptcy of any non-FDIC-insured institution.
FDIC deposit insurance covers $250,000 per depositor, per FDIC-insured bank, for each account ownership category. All of your deposits in the same ownership category in the same FDIC-insured bank are added together for the purpose of determining FDIC deposit insurance coverage. For example, if you have a single ownership account at an FDIC-insured bank and a joint ownership account with one or more people at the same bank, you will be insured for up to $250,000 for your single ownership account deposits and also insured separately for your ownership interest up to $250,000 for all of your joint ownership account deposits.
FDIC deposit insurance covers checking and savings accounts, money market deposit accounts (MMDAs), and certificates of deposit (CDs). Investment products that are not deposits, such as mutual funds, annuities, life insurance policies, and stocks and bonds, are not covered by FDIC deposit insurance.
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Checking accounts are convenient and safer than storing cash
Checking accounts are incredibly safe places to keep your money. Financial institutions go to great lengths to protect your cash and keep it out of the hands of thieves. The National Credit Union Administration (NCUA) automatically guarantees accounts up to $250,000 for each member of a federally insured credit union. Similarly, the Federal Deposit Insurance Corporation (FDIC) offers the same level of protection for customers who have money in checking accounts at FDIC-insured banks.
Checking accounts are also more convenient than storing cash. They offer easy access to your money and flexibility in the way you pay for your purchases. You can pay by writing cheques, using a debit card, or through a digital wallet on your smartphone. You can also transfer money to other people and pay bills through mobile and online banking. Additionally, you can check your balance, track spending, and set up alerts through mobile and online banking.
While checking accounts are generally safe, there are some security concerns to be aware of. The biggest threat to your money in a checking account is a lost or stolen debit card, which could be used by a thief to make purchases or access your account online. However, banks have built-in security features to protect against unauthorized debit card transactions, including passwords, firewalls, encryption, and multi-factor authentication.
It's important to note that while checking accounts offer convenience, they may not be the best place to keep all your money. Since checking accounts offer easy access to funds, they can lead to increased expenses and temptation to spend. Therefore, it's recommended to keep only enough money in your checking account to cover your monthly expenses and put the rest into a savings account or other investment vehicles.
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Checking accounts can be used for day-to-day transactions
A checking account is a financial account designed for daily use and spending. It is used for day-to-day transactions and cash deposits and withdrawals. Checking accounts are available from banks and credit unions, including traditional brick-and-mortar banks and online-only banks.
There are different types of checking accounts, including traditional checking accounts and premium checking accounts. Traditional checking accounts have a monthly service fee, which may be waived if certain requirements are met. Premium checking accounts offer perks that would normally be paid for with a traditional checking account, such as no-fee personal checks, no-fee money orders, or waived out-of-network ATM fees. Some banks offer additional perks, such as lower mortgage interest rates.
Checking accounts typically come with a debit card that can be used at ATMs or retailers. Many checking accounts also offer online bill payment services. With a checking account, you can deposit money, make transfers, write checks, withdraw cash, pay bills, and take care of other banking transactions either in person at a branch, an ATM, or online.
Some checking accounts pay interest on your balance, although this is not common as the funds in a checking account are typically treated like cash and are used for everyday transactions. If you are interested in growing your funds, you may want to consider opening a savings account in addition to your checking account.
Federal deposit insurance protects up to $250,000 in a checking account at FDIC-insured banks and NCUA-insured credit unions.
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There are different types of checking accounts with various perks
Checking accounts are a valuable tool for managing daily expenses, and there are many options available. A traditional checking account is the most common bank account, providing basic functionality for everyday banking needs. These accounts are used for day-to-day cash deposits and withdrawals, and you can access your money through in-person withdrawals, a debit card, bank wire transfers, or by writing checks. Most traditional checking accounts have a monthly service fee and may charge other fees for things like out-of-network ATMs, checks, and overdrafts.
However, there are many different types of checking accounts with various perks and benefits. For example, premium checking accounts offer perks that aren't typically included in traditional checking accounts, such as no-fee personal checks, no-fee official checks, no-fee money orders, or waived out-of-network ATM fees. Some banks may also offer additional perks, such as lower mortgage interest rates.
Rewards checking accounts are another option that offers perks and rewards, such as cash back on debit card purchases, ATM fee reimbursements, and other incentives. These accounts usually require meeting certain criteria, such as making a minimum number of monthly debit card transactions or maintaining a minimum balance.
Some other types of checking accounts include teen checking accounts, senior checking accounts, private checking accounts, and business checking accounts. Teen checking accounts allow minors to open a joint bank account with a parent and learn to manage their spending. Senior checking accounts are for individuals aged 55 and up and may offer perks like waived fees and discounts on loans. Private checking accounts are for customers who maintain a high account balance and want a private banker. Business checking accounts are available from brick-and-mortar banks, credit unions, and online institutions, offering minimal bank fees and online account management.
When choosing a checking account, it's important to consider the fees, perks, and banking experience to find the best option for your needs.
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Frequently asked questions
Yes, most checking accounts held by traditional banks are insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC protects your money in deposit accounts up to the maximum allowable amount in the event the bank fails.
In the event of a bank failure, the FDIC will work to find another financial institution to buy the failed bank, and your FDIC-insured deposits will be transferred to this acquiring bank.
If the FDIC cannot find a buyer for the bank, they will send you a check for the amount you had in your account up to the maximum amount allowed by law.
