A checking account is a deposit account with a bank or other financial firm that allows the holder to deposit and withdraw funds.
Checking accounts are highly liquid, allowing for deposits and withdrawals, unlike less liquid savings or investment accounts.
The trade-off to increase liquidity is that current accounts do not bring high interest to holders, if any.
Money can be deposited in banks and through automated teller machines (ATMs), by direct deposit or other electronic transfer; account holders can withdraw funds through banks and ATMs by writing checks or using electronic debit or credit cards linked to their accounts.
It is important to keep an eye on the current account fee that is charged for overdraft. Some banks also require that the account balance exceed the required amount.
The 3-6-3 rule is a slang term for an informal practice in banking, especially in the 1950s, 1960s and 1970s, that was the result of the industry’s uncompetitive and simplistic conditions.
The account balance represents the available funds or present value of an account of a particular financial account, such as a checking, savings or investment account.
The annual equivalent rate (AER) is the actual interest rate on investments, loans or savings accounts that can be obtained after compounding interest.
The bank reconciliation report summarizes the banking and commercial activities by reconciling the organization’s bank account with its financial statements.
A bank run occurs when large groups of depositors withdraw their money from banks at the same time, out of fear that the institution will become insolvent.