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What You Need to Know About Bank Accounts

You might think you already know a lot about bank accounts, because you might have had one for years. It’s easy to stay with the same bank you’ve used for the past 20 years and never consider switching.

In fact, the average U.S. adult has used the same primary checking account for about 16 years, according to a survey. Twenty-six percent of individuals have held onto a checking account for more than 20 years.

Furthermore, the survey found that seniors aged 65 and older have stuck with checking accounts for an average of 26 years. Some have kept their money in the same bank for 50 years!

However, you might want to take a look at your current bank account and banking situation. Is it the best possible account for your situation? Has it offered you the best rewards? The lowest fees?

Let’s go over the basics, some red flags and some things to look for if you’re interested in switching bank accounts.

What is a Bank Account?

Your bank account, a financial account maintained by a bank or other financial institution, involves financial transactions in a relationship with you and your bank.

Take a look at a few things to take a look at before you choose the right bank account for you:

  • You may still pay for your “free” account: If you don’t meet certain criteria, your account might not be free. For example, if you don’t maintain a certain monthly balance, make a certain number of direct deposits or switch to paperless statements, your account may charge you.
  • You may face limits with your account. As of April 2020, banks no longer have to uphold the “six withdrawal limit rule,” which means that your bank can allow you to make more than six withdrawals per month from your savings accounts without paying an excessive withdrawal fee. However, not all banks have switched to the new rules.
  • You may still pay overdraft fees. Your bank can still charge you overdraft fees even if you opt out of them. Linking your checking account to your savings account often allows you to sidestep overdraft fees.
  • You may not earn much in returns. Unfortunately, the national average interest rate for savings accounts amounts to a low 0.06%, according to Bankrate’s June 30, 2021 weekly survey of institutions. That’s pretty low.

In addition to these not-so-savory facts about bank accounts, bank accounts also offer great perks, which we’ll outline below. The big benefit to having a bank account: The FDIC insures up to $250,000 per depositor, per insured bank for each account ownership category.

What is a Checking Account?

A checking account allows you to pay for things without using cash, using a check or a debit card. A written check orders a bank to pay money from your account to an individual or institution to whom the check has been written.

You can often access your money through an automated teller machine (ATM), an electronic banking outlet that allows customers to complete basic transactions without using a bank teller’s assistance. You can access cash at most ATMs as long as you have a debit card or credit card.

You can choose between several types of checking accounts.

  • Traditional checking account: A traditional checking account offers access to the basics, including a debit card with which you can use to make purchases and withdraw cash at ATMs.
  • Premium checking account: Premium checking accounts offer interest payments, waived fees, free financial advice, bank product discounts, reward points and more. Note that you may have to maintain a specific balance on your account.
  • Senior checking account: A senior checking account offers checking account features for customers 55 and older. Each bank offers different perks for each type of account.
  • Interest-bearing account: Interest-bearing accounts allow you to earn interest on your account, just like you would with a savings account. Some offer higher interest rates than others, so compare banks before you choose the right interest-bearing account for you.
  • Business checking account: A business checking account allows you to keep your personal finances separate from your business. You can more easily keep your business records organized. Take a look at this option if you know you’ll write checks for your business.
  • Checkless checking: Checkless checking accounts don’t allow you to write checks but they do protect you from having to pay overdraft fees.
  • Rewards checking account: Just like it sounds, a rewards checking account allows you to earn cash back on your debit card purchases. This means it offers cash back and pays a higher yield and may even reimburse any out-of-network ATM fees.
  • Joint checking account: Two or more people can use a joint checking account, such as married couples or business partners. Each person named on the account can contribute to and use money in the account.

Can you find other types of checking accounts on the market? Yes! It’s a great idea to do a lot of research before you choose the right type of checking account for you.

What is a Savings Account?

Banks and credit unions also offer savings accounts to help you keep the money you want to spend separate from the money you need to save. Some savings accounts offer great perks, including high returns. Check out a few facts about savings accounts:

  • Online accounts often offer the best rates. Many online banks trade off the costs of maintaining physical branches with higher returns. You can’t go to physical branches, however, so if you feel that you need that one-on-one relationship, an online-only bank might not work well for your needs.
  • You may face minimum balance requirements. You may need to fulfill a minimum balance requirement to maintain an account. Check into the details and determine whether you can maintain those balance requirements.
  • You may have to pay monthly maintenance fees: Some banks waive fees if you’re a certain age or have a certain number of automatic transfers each month.

Are there other perks and red flags you have to watch out for within savings accounts? Of course! Again, you need to do the research to figure out which one works best for you.


This material is for informational purposes only and should not be construed as financial, legal, or tax advice. You should consult your own financial, legal, and tax advisors before engaging in any transaction. Information, including hypothetical projections of finances, may not take into account taxes, commissions, or other factors which may significantly affect potential outcomes. This material should not be considered an offer or recommendation to buy or sell a security. While information and sources are believed to be accurate, UNest does not guarantee the accuracy or completeness of any information or source provided herein and is under no obligation to update this information.