3 Reasons a Checking Account is Essential

Many people recognize the value of having a savings account if only to ensure they can pay the bills for a while when there isn’t any income coming in. What fewer appreciate is the need for a checking account. Here are three reasons a checking account is essential.

Avoiding Interest on Payments

There are many people who pay for everything via credit cards and then try to pay it off at the end of the month. This seems like a way to avoid having to deal with a checking account. However, if they cannot pay it off at the end of the month, they pay interest on the remaining balance.

If you have a 15% interest rate on your credit card, you’ll pay about 2% interest on any remaining balance. You shouldn’t pay $20 extra to delay paying a $1,000 bill. And you never run the risk of regular payments bouncing because you forgot to update credit card information when you received the new one.

Safety and Security

That box filled with cash under your bed could be stolen, and you have no recourse except to report it to the police and hope they find the perpetrator. If you use credit as a backup source of funding, you risk being unable to pay bills if the card is lost or canceled.

Conversely, money in checking accounts will stay there as long as you don’t hit the ATM too often. And unlike cash or gold that is hidden in your apartment, the cash in the checking account is backed by the FDIC.

Another added benefit is the safety and security you get when the check acts as proof of payment. The carbon copy in your checkbook is potential evidence that you wrote a check to pay the rent by the date it was due, and the bank’s records will show when it was cashed.

Greatly Reduced Fees

Some businesses pay employees via debit cards that contain the person’s entire paycheck. You can use it to pay for gas, groceries, and other essentials. What many don’t realize are the fees that nickel and dime you. You pay a small fee for hitting the ATM more than once for cash. You probably pay a small fee for paying for something online. You may pay for checking the account balance. Each of these transactions erodes the limited value on the card, and any negative balance eats into your next deposited paycheck.

Compare this to a checking account where you don’t have to pay to check the balance, pay bills electronically, or hit an in-network ATM. And if you have a checking account with a bank, you’ll avoid the fees convenience stores charge for cashing checks because you’re an account holder. A side benefit of checking accounts is that you never have to step into a payday lender to cash the check and risk taking out high-interest loans with them because they talk you into it.


A checking account is essential for a number of reasons. If you need to pay bills, want lower fees, and you have easier access to funds, then a checking account is probably the best choice for you.