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What Does Opening a Checking Account Imply?BY: Jessica Parker | Category: Finance | Submitted: 2010-04-25 16:30:20
Opening a checking account should only be done when you know you are responsible enough to handle it because it can have huge implications on your credit. You should be careful with it and spend money in a responsible way. A checking account doesn't necessarily imply troubles because most people use it to cover their financial needs and to have financial assistance. All you need to do is to stay out of debt problems, avoid spending money irrationally and understand how such an account works and what implications it might have. Before opening a checking account, analyze your spending habits and start with something simpler if you consider it's enough for your needs. When first becoming employees, teenagers are often advised to try opening a checking account. This can have a positive impact on a teenager as long as he or she is responsible. It can guarantee financial independence to the teenager. The companies usually direct the pay checks directly into this type of account, so cashing them becomes unnecessary. Parents should prevent the teenager for opening a checking account if he or she is not responsible enough in what concerns money. The alternative is to open a savings account with rigid withdrawal rules. They can also come with an ATM card, so there's no disadvantage from this point of view. Prior to opening a checking account one should think if he or she had any closed accounts in the past. The overdraft protection that checking accounts have nowadays can be very misleading. This offers protection against missing payments if you happen to make a mistake. The problems appear if you take money out of it and you can't pay them back. If you don't put them back in thirty days the bank closes your overdrawn account. They also charge you high fees when making payments through this overdraft protection. Opening a checking account can prove difficult if you had closed accounts in the past. Situations like the one described above are reported in credit reports. One can attempt to open another checking account only after the debt is paid. However, if he or she had multiple closed accounts in the past, getting another one might be impossible. If this is the case, they can only open a savings account. This type of account doesn't come with the privileges of a checking account and it gives you less financial freedom. If you can't open a checking account, go for a savings one. You can deposit your money and also have immediate access to them, but you can't make any financial mistake. After you get accustomed with the savings account you can think about opening a checking account. Only do this when you are sure that your spending habits won't lead you to making mistakes. A way to avoid this is to ask the bank to leave out the overdraft protection they offer. You won't be tempted to "borrow" money that you are unable to put back and to get in trouble with the bank. Article Source: http://www.writearticles.org/ About Author / Additional Info: Comments on this article: (0 comments so far)
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