A check, dollar bills and a pen.

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A checking account is a safe place to park your money and gives you easy access to your cash. Opening and using a checking account is simple, but there are some things you should know before making your first deposit.

Here’s an overview of the basics.

Checking account basics: an overview

While savings accounts are meant to hold money for events and emergencies in the near future, checking accounts are designed for everyday transactions. That means it’s easier to deposit and withdraw money from a checking account. In contrast, there are often restrictions on the flow of money in and out of a savings account. For example, you might only be able to make a certain number of withdrawals each month from a savings account without being charged extra fees.

Most people make their checking account the central hub of their financial life, using it to pay bills, make purchases and receive regular direct deposits. Banks and credit unions typically always offer checking accounts, although there are a number of online banks and divisions that don’t provide them.

Benefits of checking accounts

The reason checking accounts are central to most people’s finances is because they have many benefits. Here are some of the most valuable features:

Access to debit cards

Most checking accounts provide access to a debit card that allows customers to make purchases. Using a debit card may be easier than carrying around wads of cash. And there’s no risk of going into debt because the funds you use come straight from your checking account.

Assurance that your cash is safe

Checking accounts are insured by the Federal Deposit Insurance Corporation, just like savings accounts. Up to $250,000 of the money you place in your account is backed by the full faith of the U.S. government (per member bank, per depositor, per ownership category). That means that even if your bank fails, you should still be able to get access to most if not all of the cash you stashed.

Automated deposits and withdrawals

You can arrange for paychecks and other forms of income to be deposited directly into your checking account. You can also sign up for automatic bill pay so that money can be taken out of your account and used to cover scheduled payments. Automating your deposits is one way to ensure that you’re regularly saving money without even thinking about it.

Overdraft protection

Occasionally, you might make a payment that exceeds the balance of your checking account. Many banks and credit unions offer overdraft protection to cover the difference in these situations, so you have the money you need. Expect to pay fees for this service, however. Alternatively, there are other ways to avoid paying a hefty fee for an overdraft, like linking your checking account to a savings account.

Transferring money is easy

Sending and receiving money is easier than ever. Many banks and credit unions have adopted Zelle, a p2p payment service that allows money to be deposited directly into someone else’s checking account. Others use other transfer payment systems like Popmoney. Either way, making electronic payments is a breeze and there are ongoing efforts to make the process of transferring money even faster.

The downsides of checking accounts

Hard to earn a high yield

Checking accounts are very useful on a daily basis, but there’s a reason why you shouldn’t keep too much money in them. Compared to savings accounts, you’ll usually earn a lot less interest on money placed in a checking account. According to a recent Bankrate survey, the average yield tied to an interest-bearing checking account is 0.06 percent APY. Compare the interest rates associated with some checking accounts that pay interest.

Some community banks and credit unions offer high-yield checking accounts that pay as much as 3.5 percent APY. But earning that kind of yield requires a lot of effort in the form of having a certain number of debit card transactions and setting up online bill pay, for example. it’s much easier to earn a decent rate of return through a savings account or high-yield CD.

Checking account fees

Another drawback to some checking accounts is the fees they charge. Over time, overdraft and ATM fees can chip away at the balance in your account. Fortunately, avoiding many of these charges comes down to maintaining a particular minimum balance or having a direct deposit. Pay close attention to the fine print so that you’re aware of what’s required and look for low- or no-fee checking accounts to keep your money in instead.

ATM withdrawal limits

While more businesses are going cashless, there are still plenty of consumers who regularly use cash to make payments and may need to visit an ATM every once in a while. Limitations on the amount of cash that can be withdrawn at one time can vary from one bank to the next. Withdrawal limits can be an obstacle for some, so it’s best to plan ahead if you’ll need large amounts of cash at a time.

Switching accounts may require some leg work

Americans tend to hold onto their checking accounts for a long time. Switching accounts can seem daunting, in part because of all of the automated payments and subscriptions that may be tied to an account.

There are many different types of checking accounts to choose from. If you’ve shopped around and found a better checking account for our lifestyle, consider using a switch kit, which offers step-by-step advice for how to switch over to a new checking account.

Opening a new checking account

If you’ve done your research and you’re ready to open an account that seems like the best fit for your financial life, prepare to fill out an application. You’ll need some form of ID, such as a passport or driver’s license. You’ll need to provide basic personal information, such as your address, email and Social Security number.

You’ll also need the routing and account numbers for your existing account if you’re planning to make an electronic deposit into your new account. Depending on the bank or credit union you’re interested in, there may be other ways to make an initial deposit into your account, such as mailing a check. A wire transfer may be an option as well, although you’ll likely have to pay a fee to use this service. If you’re opening the account in person at a branch, be prepared to present multiple forms of proof that you’re a resident at the address listed on your paperwork, such as a bill.

Once your new account is opened, take the time to get organized. Make lists of all of your scheduled payments made from your account and any income or payments you regularly receive. Then, begin the process of moving everything over to your new account. If there is one, talk to the human resources department at work about having your paycheck deposited directly into your new checking account. Until you’re sure everything has been transferred over properly, keep your old account open.