Why did you choose your checking account? Maybe it was due to the convenience of the branch locations. It could have been recommended to you, or perhaps the bonus you received when you signed up was enough to win you over.
Those reasons are all great, but are you taking advantage of the checking account benefits that truly help you improve your finances? You should look at your checking account as more than a place to store your money and an easy way to access it. There are many ways a checking account can help you with your current finances while also preparing for your financial future.
1. Keep Track of Your Finances
One of the most challenging parts of managing your finances is keeping track of how much you spend and how much you have available.
A checking account makes it easier for you to track this information. Setting up online banking and/or mobile banking allows you to review your account information regularly to determine how much you have available and how much you’ve spent.
Also, your checking account provides account statements which you can reference to review your spending habits over a set period. Having this information is also beneficial when you want to develop a budget.
Review your actual spending habits to determine how much you spend on different categories from month to month. This lets you see which categories you’re overspending on and where you can afford to spend more, all while painting a full financial picture.
When you track and review your finances, you can also avoid over-drafting your account, identify when you have extra money to save or invest, and pick up on trends related to your financial habits.
2. Make Payments On Time
Paying your bills on time is crucial to your financial health.
When you make payments with your checking account, there is a record in case you need to prove your payment down the line. Making a payment online using your checking account is also more secure than mailing in your payment since there’s no guarantee that the company will receive your payment on time.
You can also set up automatic payments so they’re instantly scheduled each month without you having to do anything.
3. Earn Rewards
If your checking account offers rewards, you can use them to improve your finances.
Opening a high-yield checking account lets you earn interest on your money.
For example, if on average you maintain a $5,000 balance each month, with an interest rate of 2.5%, you’ll make $125 over 12 months. While it might not be much money, you can use it to your advantage.
Use the interest to invest, add to your emergency fund, or spend on something special of your choice. Ultimately, it’s free money that you can spend as you please.
4. Keep Your Money Safe
Cash can be lost or stolen with no way to retrieve it or prove how much you lost; however, when your money is in a checking account, there’s a paper trail that can be protected.
If you lose your card, you can disable it and rest assured that your money is safe in your account.
If you make a purchase and aren’t satisfied with the product or you don’t receive the service you paid for, your account provides protection.
As long as you deposit your cash into an account that’s insured by the Federal Deposit of Insurance Corporation (FDIC) or National Credit Union Association (NCUA), your money is protected for up to $250,000.
5. Access Your Paycheck Quicker
When your paycheck is deposited directly into your account, you can access your money quicker. When you have access to your funds quicker, you can use your funds sooner to handle the financial responsibilities in your life.
In many cases, you will have access to the funds in your account before you would receive your physical paycheck if you opted out of the direct deposit, oftentimes a whole day early. This means that if you would get paid on a Friday, funds will be deposited in your account on Thursday! Enjoy getting a paycheck before your co-workers.
6. Automate Your Savings
Saving is a difficulty for many Americans, so you might be able to relate.
According to an article by CNBC Markets, only 40% of Americans can afford to take care of a $1,000 emergency in cash. While this could be due to income vs. expenses, some people don’t consistently have $1,000 saved due to their financial habits related to spending and saving.
When you have a checking account, you can automate your savings, so it comes out without you having to lift a finger. When it’s on autopilot, you’re more likely to be consistent and successful in reaching your goals.
Use Available Checking Account Benefits To Improve Your Finances
There are many reasons you should use a checking account beyond ATM and debit card access. If you’re strategic with your checking account, you can earn cash back and rewards, keep your money insured, access your money quicker, manage and review your finances regularly, and automate some of your financial obligations.