How to Handle a Checking Account

How to Handle a Checking Account
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When you have money coming in and expenses going out, a checking account can help you manage your finances. With spending money tucked safely in your checking account, you have access to it by writing checks and using a debit or ATM card. It’s important to manage your checking account carefully or you could run into trouble with your account balance.

Learn the fees your bank will charge you for your checking account to enable you to minimize fees, if possible. For example, some banks charge a monthly fee if your checking account balance falls below a specific amount, so keep your balance above this amount, if possible. Some banks charge a fee for transfers between checking and savings accounts if you conduct more than a certain number of transfers in a month. Make sure you stay below the maximum number of transfers to avoid fees.

Record all transactions connected with your checking account immediately after you finish them. The different transactions to record include deposits, checks, debit card and ATM transactions, and automatic or recurring bill payments you have initiated. Include the dates and the amounts of each transaction and subtract or add the transaction amount from your checking account balance, as appropriate.

Monitor your account balance regularly. Careful monitoring of your account ensures that you won’t overdraw your account by writing checks or using your debit card to make purchases that exceed your account balance. Monitoring your account also enables you to catch any fraudulent activity that could happen if you lose your debit card or ATM card or have them stolen.

Verify that you have enough money in your account to cover any withdrawals you make from your checking account. Deposits sometimes take one to two days to become available in your account. Debit and ATM withdrawals happen immediately. Don’t assume you have time to cover a check between the time you write it and the time it clears your account. With the Check 21 Act, banks process checks faster because they transmit checks electronically. Checks can clear your account overnight now, in some cases.

Reconcile your checking account every month when your bank sends your account statement. Compare every transaction recorded in your checkbook register with the transactions recorded on the account statement. Make a list of all deposits and withdrawals not included on the account statement -- these are outstanding transactions that the bank has not recognized yet. Add deposits and subtract withdrawals from the balance on the account statement. This number should match the balance shown in your checkbook register. If it does not match, recheck your figures. Contact your bank if you can’t reconcile your account balance to determine whether an error occurred.