With the rise of e-commerce and paperless practices, do you need a checking account even if most of your financial activities are carried out electronically? In the Philippines, check payments continue to be prevalent, with certain transactions like loans and lease payments often requiring the use of post-dated checks. Learn how checking accounts work and other related information to help you decide if you should have one.
A checking or current account is a type of bank account that allows you to issue checks for payments. It typically requires a higher initial deposit and average daily balance requirement and a higher minimum maintaining balance to earn interest compared to a savings account.
While a savings account is primarily for accumulating savings, a checking account is designed for spending, offering the convenience of moving large sums of money through check issuance and writing post-dated checks to ensure the timely payment of expenses.
A checking account comes with a checkbook, a passbook, and/or an ATM or debit card. Like a savings account, you can enroll a checking account in online/mobile banking for easier account monitoring and electronic transfers.
Deposits in a checking account are insured by The Philippine Deposit Insurance Corporation (PDIC) for up to Php500,000 per depositor.
A checking account still has its place in the digital world since you can now access them online. Deposits, payments, and withdrawals from checking accounts can be made digitally in the comfort of your home. Aside from convenience, here are its other benefits:
Loan management
Taking out a loan that requires repayment is hassle-free with scheduled post-dated checks. For instance, paying off a mortgage loan in installments through checks lets you monitor your activities because checking accounts come with detailed statements for you and the lender.
Boosted security
A checking account adds an extra layer of security because it keeps your money safe. Instead of carrying large sums of money or keeping them inside your home, securing your money in a checking account lowers the chances of theft or misplacing your wallet.
Financial management & monitoring
Because checking accounts are part of the digital revolution, you can access them just as quickly and conveniently 24/7 though online and mobile banking. Transaction records let you keep track of your payments and build a comprehensive financial history. This makes checking accounts ideal for regular spending for rent, tuition, utilities, and your business.
Good credit standing
Maintaining your account balance and making payments on time reflect well on your credit record. Managing your checking account well helps you build a positive relationship with your bank, making it easier for you to avail of other products like loans and credit cards. A sound banking history also casts you in a favorable light among lenders.
Budget building
A checking account provides a centralized site for your earnings and spending, allowing you to monitor and assess your financial behavior. This gives you a clear picture of your spending and saving patterns, making it easier to formulate financial strategies. By keeping your expenditure funds separate, you can better allocate money for specific goals, helping you stick to your budget.
Business payments
If you run a business, checking accounts can help you separate personal and professional expenses, making it easier to track your cash flow. They also maintain organized records for tax purposes and legal compliance. As your business grows, checking accounts also become essential for managing a higher volume of transactions, making it easier to scale operations.
In a nutshell, you use a check to transfer funds from your bank account to another person or organization. Whoever receives the check deposits it to their bank account. Once their bank clears the check, the money is deducted from your account and added to theirs.
Before the digital era, writing paper checks to buy things or pay bills was the only way to make payments. Now, you can also do these:
On the other hand, you can make deposits through these methods:
So, do you need a checking account? It all depends on your financial preferences, needs, and lifestyle. Check out Chinabank’s checking account and other deposit products and see which account is right for you.
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