Checking accounts do not earn you interest and are not a popular choice for saving money. Rather than that, they are preferred for the immediate access to funds that they allow, especially in online transactions and in business transfers.
There are practically no limitations on the amount of money and the number of transactions that are allowed. They are very versatile and can be used to withdraw money from ATMs, make check payments and set-up direct debits.
Another feature of the checking account is the availability of an overdraft, that is withdrawing a larger amount of funds than the one currently available in the depositors account. How much of a negative balance can be incurred is normally agreed on beforehand, and not going over that amount normally means that no, or minimal, interest needs to be paid on the amount temporarily borrowed.
Should you go even slightly over the overdraft amount agreed on though, then you may be liable to pay penalty fees and / or a high interest rate. This may well be highly disproportionate to the extra amount borrowed, so you should do your best to avoid this happening.
If you would like to earn interest on the money that you have in your checking account, then one option is to opt for a NOW (Negotiable Order of Withdrawal) account, which is very similar, but which includes interest payments on the funds in your account. Not all financial institutions offer this type of account, but ask around and you will be able to find one that does.
You will not earn interest for all money in your account, only that which is above a certain, pre-agreed, balance. You will also earn less interest on any funds that come over a specified maximum balance too. Thus, the interest rate is determined for amounts that are under this limit, and lower ones are applied to amounts that exceed this maximum.
There are practically no limitations on the amount of money and the number of transactions that are allowed. They are very versatile and can be used to withdraw money from ATMs, make check payments and set-up direct debits.
Another feature of the checking account is the availability of an overdraft, that is withdrawing a larger amount of funds than the one currently available in the depositors account. How much of a negative balance can be incurred is normally agreed on beforehand, and not going over that amount normally means that no, or minimal, interest needs to be paid on the amount temporarily borrowed.
Should you go even slightly over the overdraft amount agreed on though, then you may be liable to pay penalty fees and / or a high interest rate. This may well be highly disproportionate to the extra amount borrowed, so you should do your best to avoid this happening.
If you would like to earn interest on the money that you have in your checking account, then one option is to opt for a NOW (Negotiable Order of Withdrawal) account, which is very similar, but which includes interest payments on the funds in your account. Not all financial institutions offer this type of account, but ask around and you will be able to find one that does.
You will not earn interest for all money in your account, only that which is above a certain, pre-agreed, balance. You will also earn less interest on any funds that come over a specified maximum balance too. Thus, the interest rate is determined for amounts that are under this limit, and lower ones are applied to amounts that exceed this maximum.
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