Checking account application

Susan Kelly Updated on Dec 20, 2021

Commercial or business checking accounts, student checking accounts, joint checking accounts, and a slew of other account types with similar benefits all fall under the category of checking.

A commercial transactional account is owned by the business and utilized by it. It is up to the company's officials and managers to sign on the account, as stated in the company's governing documents.

Until the student graduates, the free checking account offered by the bank will remain free. Checks can be written on the account by one or more people who are usually married partners.

Checking Accounts and Banks:

Most large commercial banks employ low-cost checking accounts or transactional accounts as loss-leaders to attract new customers.

With free or low-cost checking accounts or transactional accounts, banks are able to acquire customers and then persuade them to use more profitable products like mortgages and certificates of deposit in order to make a profit from them.

Banking may have to rethink this strategy if other lenders like fintech businesses give customers an increasing number of loans. If banks are unable to offer enough profitable goods to cover their losses, they may, for example, raise the fees on transactional accounts.

Using Checking Accounts:

A bank branch or a financial institution's website can be used to open a checking account for an individual. Automatic teller machines (ATMs), direct deposits, and checks can all be used by account holders to make deposits. They can utilize their money by writing cheques, withdrawing cash from an ATM, or using an electronic debit or credit card that is linked to an account.

Advances in electronic banking have made transactional accounts easier to use. Payments can now be made by e-transfers, eliminating the need to write and mail cheques. Automated monthly payments can be set up as well as smartphone apps for depositing or transferring money.

Checking Accounts and Overdrafts:

There are times when a bank will cover the difference between what you have on hand and what you write a check for.

What many financial institutions fail to tell their customers is that if your account goes into overdraft, you'll be charged a fee. Using a debit card to make transactions of $25, $25, and $53 with a $50 account balance, for example, can result in an overdraft fee, which is normally rather high, being applied to both the original purchase and any further purchases you make after you've gone into the red.

But that's not all. For example, if you purchased $25, $25, and $53, you would not only be charged a fee for the last purchase. In the event of an overdraft, many banks stipulate those transactions shall be grouped in the order of their size, regardless of the order in which they occurred. As a result, the bank would charge a fee for each of the three transactions on the day you went overdrawn in the amount of $53, $25, and $25. In addition, if your transactional account is still overdrawn, your bank may charge you interest on the loan every day.

Checking Account Features:

Direct Deposit:

Employers who use direct deposit can have their funds deposited directly into your transactional bank account, allowing you rapid access to your money. This characteristic is also beneficial to banks, as it provides a consistent stream of income for them to lend to consumers. If you have a direct deposit set up for your transactional account, many banks may waive the fees associated with checking (i.e., no minimum balance or monthly maintenance fees).

Electronic Funds Transfer:

When you use an electronic funds transfer (EFT), also known as a wire transfer, you don't have to worry about waiting for a cheque to arrive in the mail. EFTs are now free at most banks.

Checking Account Service Charges:

It is well knowledge that banks make money by charging clients interest on loans, but service fees were first implemented to compensate for transactional accounts that did not generate enough interest to pay for the bank's operating costs. If you have a $10 balance in an account, it costs the same to keep it open as it does to keep an account with a $2,000 value open. The $10 account, on the other hand, costs the bank more money than it brings in, whereas the larger account earns enough interest to cover the bank's costs.

This gap is compensated for by the bank collecting fees for customers who fail to maintain a minimum balance or write too many checks.