You don’t write letters at your desk with a pen and paper -- you fire off emails and texts from your phone. You don’t purchase compact discs at the record shop -- you download your music. And you prefer to pay for items and services with a digital wallet, credit cards, and gift cards. So why do you need a traditional checking account? Despite all the changes in our lives from the advances in technology and the internet, it still makes plenty of financial and organizational sense to maintain a checking account. And with competition from new internet-only banks, aka "direct banking," traditional banks have been increasing their online offerings. Even if you can’t conceive of a reason to visit a brick and mortar bank, there are options for a checking account that do not involve regularly visiting a local branch. So, while the methods of banking and personal finance products are constantly evolving, there remains plenty of good reasons why someone in 2018 should maintain a checking account.
1) A safe home for your income
If you work, you have to get paid. Having a central account in which one can deposit funds makes sense for most people. And there is no substitute for the convenience and speed by which you get compensated when your paycheck is deposited directly into your checking account. Whether you receive payment via check, electronic transfer, or cash, a checking account becomes the primary place where one can deposit all your income. Furthermore, the insurance provided by the FDIC means that the deposits in a checking account are insured up to $250,000 by the government -- a whole lot safer than keeping cash in the sock drawer.
2) Pay your bills easily
From the balance in your checking account, you can pay online for all of life’s monthly expenses. Online bill pay, debit card, mobile apps, digital wallet -- these are all modern versions of the age-old writing of a check. Some banks will offer bill pay directly through their website, listing the most popular utilities in your area for convenient automated payments. Checking accounts are also useful to pay the balance on credit cards and loans, whether the payments are made online or through the mail. Although many utilities have options for bills to be paid via cash, it can be a time-consuming process. Checking accounts not only keep your funds safe, but they offer convenience and the opportunity to organize your finances efficiently.
3) Balance your budget
Another advantage of maintaining a checking account is that you can learn how to budget and spend within your means. Monitoring expenses so that one does not spend more than one earns is far less complicated when it is done from a centralized account. With online bank tools, you don’t have to wait until the end of the month to see the balance in your monthly statement. Real-time balances are available online 24/7, allowing you to oversee whether payments have cleared or when deposits have hit. And remaining vigilant about your spending means that you can avoid most bank fees, by keeping your minimum balance, only using ATMs in your bank’s network, and avoiding overdraft penalties.
4) Cash or debit only
It happens occasionally: you are ready to pay for that new pair of shoes or that delicious dinner when you learn that the business does not accept credit cards, only debit cards, checks, or cash. Although much of modern life has become digitized and moved onto mobile devices, there will be people and businesses somewhere in the world that do not accept the method of payment you most prefer. Having a checking account means having multiple methods available to complete a purchase. You will have a debit card to either complete the purchase or make a cash withdrawal. You will have access to personal checks that could be the merchant’s preference. And with large purchases, like buying a car, you may be asked to pay with a cashier’s check, acquired either online or from your local bank branch.
5) Reasons to visit the local branch
There are plenty of reasons to consider an internet-only bank: without the costs associated with maintaining physical branches, internet-only banks have fewer fees and offer round-the-clock customer support. For some, those offerings are perfect: they enjoy the majority of features and services of a traditional bank without the costs and fees associated. But what if you lose your ATM card and need an immediate replacement? Need a cashier’s check? Need a safety deposit box? Or maybe you wish to discuss the details of loan offerings face-to-face with a knowledgeable loan specialist? Some of those services are either not available with internet-only banks or can only be made over the phone. So, while many aspects of personal finance do not require regular contact with a local branch, consumers should take into account what type of services they may need before choosing a virtual or traditional checking account.
6) Interest-bearing accounts
If you are able to save more money than you spend every month, your balance could be generating income in an interest-bearing account. For most banks, this amounts to little more than a trifle -- somewhere between .01% and .02%. Still others may offer more than 1-2%, which could add up for some account holders and earn them significant interest. With so many investment opportunities in the marketplace, from certificates of deposit (CD) to brokerage accounts, interest-bearing checking accounts are yet another opportunity for an individual to save and invest. Consider all your investment options based on your income -- the interest from an interest-bearing account, in most cases, shouldn’t be the deciding factor on what type of checking account to choose.
The future may be bankless, but…
Not only are new methods of payment being adopted every year, but we are seeing whole new currencies and financial systems. And while the market will inevitably decide on what technologies will become the new standards for payment, the checking account remains a central part of how we receive, save, and distribute funds. The internet-only banks are disrupting the industry with no/low fees and mobile convenience, while traditional banks can offer the average consumer the added convenience of a local branch and a large network of ATMs. When signing up for a checking account, consumers should be realistic about what services and features they need and then be vigilant about avoiding unnecessary fees.