Checking Accounts in the Digital Age
With all the digital wallets and digital currency in the news today, you might be wondering: do I even need a checking account? The answer is overwhelmingly: Yes!
Today’s checking accounts are not your grandad’s accounts. You can have full mobile and online access to your account. Deposit checks by taking a picture with your phone. You can also connect your checking account to your online apps for convenience. The biggest advantage of a checking account with your neighborhood bank, though, is security. At Homewood Federal Savings Bank, our checking accounts are federally insured through the FDIC for the first $250,000 you have deposited with us.
Checking accounts versus digital wallets
The ease and convenience of “tap and pay” has made digital wallets the go-to choice of Gen Z. As they are now entering young adulthood, though, it’s important they understand the need for a traditional checking account with a local bank.
- Direct deposit — Many employers today prefer the ease and security of direct deposit for paychecks. As Gen Z is now entering the job market, having a checking account is essential for being paid. A digital wallet is not set up for this type of transaction.
- Automated bill paying options — Online and mobile banking allow you to automate routine transactions, and enter periodic transactions into their Bill Pay services. You still have the option to pay bills with a traditional check, if it’s necessary. Digital wallets are designed more for purchases than for paying bills.
- Budgeting — You can easily and effectively keep track of your income and expenses through online and mobile banking with your checking account. In some cases, you can even download your transactions into your budgeting software or app. If you’re using your debit card, you can see those transactions, and their effect on your balance, as they are happening. When you “tap and pay” with your digital wallet, it’s easy to lose track of how much you’ve actually spent and how it affects your finances.
Checking account perks
As a deposit account, checking accounts often earn interest. Although it’s a small amount, maintaining a minimum balance in an interest-bearing checking account is a good way to maximize your deposit. Many banks offer tiered checking accounts that will pay you a higher interest rate if you maintain a higher balance.
Checking accounts, unlike many savings accounts, offer ATM access to your money. You can write checks to pay bills. You can use online or mobile banking for payment. You can attach your checking account to a digital wallet or other online payment service to give you additional payment options while still protecting your deposit. Your money is always available for you to use when you need it.
Having your paycheck, and other income, direct deposited into your checking account allows you to also manage your savings and investments. You can work with your local bank to ensure an automatic transfer of funds from each paycheck into your savings and investment accounts. You are paying yourself first, which is the best way to build savings.
But, what about the fees?
Checking accounts may be subject to fees. However, there’s a lot you can do to avoid having to pay them.
Most checking accounts have a minimum balance requirement to avoid monthly maintenance fees. Check your online or mobile banking daily to ensure you are spending carefully and not drawing down your account below that minimum, or you’ll have to pay the fee that month.
You need a checking account. You may not be writing checks at your local grocery store or gas station anymore, but a checking account will serve you well in today’s digital era. In Baltimore, Homewood Federal Savings Bank offers interest-bearing checking accounts with online and mobile banking options, and a large ATM network.