An EtherChannel is a way of combining several physical links between switches into one logical connection. Normally, Spanning Tree blocks redundant links; Ether Channels get around that and enable load balancing across those links. Traffic is balanced between the channel links on the basis of such things as source or destination MAC address or IP address. The EtherChannel load‐balancing method is configured at global configuration mode. 

(config)# port‐channel load‐balance type 

A logical interface—called the Port Channel interface—is created. 

Configuration can be applied to both the logical and physical interfaces. 

Some guidelines for EtherChannels follows: 

■ Interfaces in the channel do not have to be physically next to each other or on the same module. 

■ All ports must be the same speed and duplex. 

■ All ports in the bundle should be enabled. 

■ None of the bundle ports can be a SPAN port. 

■ Assign an IP address to the logical Port Channel interface, not the physical ones, if using a Layer 3 EtherChanne. 

■ Put all bundle ports in the same VLAN, or make them all trunks. If they are trunks, they must all carry the same VLANs and use the same trunking mode. 

■ The configuration you apply to the Port Channel interface affects the entire EtherChannel. The configuration you apply to a physical interface affects only that interface.

References:

http://en.wikipedia.org/wiki/EtherChannel