Maintaining
a Balanced Checking Account
A
checking account is a contractual relationship between you and
your financial institution, with each party having specific responsibilities:
- The
financial institution holds your money in a safe place and helps
to facilitate your purchases
- You
are responsible for handling your account wisely by not writing
checks for more money than you have in your account
Rejected or Bounced Checks
If you write a check for more than is in your account, the check
will be rejected when it comes in for payment. It will be sent
back to the person who deposited it and you will be charged for
"bouncing" it. The merchant you wrote it to will not
only charge a returned check fee, but the law enables the merchant
to charge you for up to three times the amount of the check. In
addition, you may be subject to court proceedings and be required
to take special classes on money management. One bad $12 check
could cost you $150!
Do not write a check before you make a deposit, counting on the
"float" time. With the electronic nature of banking,
a check can clear the financial institution the same day you write
it.
Overdraft Protection
Many financial institutions will offer you overdraft protection
through your credit card or savings account. When you write a
check for more than is in your account, the overdraft protection
will kick in and the check will be covered. There is usually a
fee charged for this service.
Online Account Access
Many financial institutions now offer account access via the Internet.
This service is usually free of charge, and is a convenient way
to keep track of your transactions.
The
ability to transfer funds, receive and pay bills, place a stop
payment on a check, and downloadable financial management software
are also commonly available online services.
Keeping Track
Keep track of your deposits (credits), checks you write, ATM withdrawals,
and fees you are charged (debits) in a check register. Record
the following information:
- Check number (this alerts you if a check is missing in sequence)
- Date
you wrote the check or made the deposit
- Who
you wrote the check to
- What
you wrote the check for
- The
amount of the check
Balancing
Your Bank Statement
Each month your financial institution will send you a statement
detailing the activity in your account. This includes all the
checks you wrote, ATM withdrawals, deposits, charges, fees and
any other activity on your account during the month. It is important
that you carefully review this statement to make sure it agrees
with your records. Mistakes can be very costly!
Steps
to Maintaining a Balanced Account
- Mark
off in your check register every item that appears on your statement.
If there are items on your statement that are not listed in
your check register, first determine if it is accurate. You
may have forgotten to record something in your check register.
If the item is correct, list it in your check register. If you
believe the item is incorrect and you suspect an error was made,
call the financial institution immediately to have it investigated.
- Your
financial institution should provide you with a monthly reconciliation
worksheet. Enter the ending balance shown on your statement.
-
List the deposits and other credits that are in your check register
but are not on your statement. Add these to your ending balance.
- List
the checks, ATM withdrawals, fees and other debits that are
on your check register but not listed on the statement. Subtract
these from your balance in step 3 to get your new ending balance.
-
Write down the balance in your checkbook.
- List
deposits that are on the statement but are not in the check
register. Add these to your checkbook balance.
- List
the checks, ATM withdrawals, fees and other debits that are
on your statement but are not listed in your check register.
Subtract these from your balance in step 6 to get your new ending
checkbook balance.
- These
totals should now be the same. If they aren't, re-check everything
again and again until you see the error. If all else fails re-add
your checkbook. If you still can't find the error, ask for assistance
from your financial institution, or contact BALANCE at (888)
456-2227, and an InfoLine counselor will review your statement
with you over the phone.
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