In deposit terminology, the term Checking Account refers to a deposit account at a bank or other financial institution which allows the holder of the account the ability to write checks against their deposits. While most Checking Accounts do not pay interest on Deposits, some Checking Accounts do pay interest.
For example, a Checking Account is often called a demand account because the funds held on deposit by the financial institution are always available to the depositor upon their demand for them. Once the holder of the account writes a check against the account, the financial institution is then obligated to pay the amount of the check that is either written out to a third party or cashed by the holder of the account. Some Checking Accounts that are known as Negotiable Order of Withdrawal or NOW accounts will pay the depositor interest on their account balance, with the interest rate often contingent upon a certain amount of money remaining on deposit. Other banks and financial institutions will charge a small monthly service fee on a Checking Account that falls below a certain balance.