- Bank checking transactions require the consumer to have a checking account. The customer deposits money into her account, through checks, money orders, cash or electronic transactions such as employer direct deposit. The checking account holder can then write checks, either on paper or online, to pay for bills and other purchases. When a check is written, the writer promises that there are sufficient funds in the account. Every night, the bank pays each check that comes through the account as long as there is money in the account. In the event there are insufficient funds, the bank can either pay the check or return it to the recipient unpaid. In either case, the bank will charge an overdraft fee to the customer.
- A checking account holder may also get a debit card if his bank allows it. These are like ATM cards, except they have Visa or MasterCard logos. The consumer can use her debit card to withdraw cash from an ATM or use it like a credit card to make purchases both online and in-person. This is especially helpful because many merchants no longer take checks, due to the chance they could be returned by the bank or "bounced." However, the customer can only use the debit card for a purchase if there is enough money in the checking account to cover it.
- People with checking accounts can ask their bank to issue cashier's checks to a specific person or company in a fixed amount. For example, a customer wants to make a bill payment of $500 to a landlord who doesn't accept personal checks due to the risk of insufficient funds problems. The consumer asks the bank, usually in person, to issue a cashier's check. The recipient can then deposit the check into her own account and not worry about having the check returned .
- Writing bad personal checks is a crime in every state, and can be punishable by jail time. When someone writes a check, he is promising payment for goods or services. Failure for the check to be fulfilled is considered a form of theft, and intentional misuse of personal checks is poorly tolerated by banks and merchants alike. However, most cases of bounced checks can avoid criminal prosecution if the writer quickly pays the merchant in full for the transaction, along with any other fees she may have incurred due to the problem.
