Keep Your Checking Account Balance in the Green

My Money September 09, 2015

Bank accounts are a common financial tool for most people. According to the Federal Deposit Insurance Corporation (FDIC), over 92 percent of American households had a bank account in 2013, of which the most popular type was a checking account.

If you are one of the millions who use a checking account on a regular basis, it is important to know how to keep it balanced. This can help you avoid overdraft charges if your account ever goes negative and minimize the risk of any suspicious activity going unnoticed. Stay ahead of the game by learning more about balancing your checking account.

Get to Know Your Checking Account
A checking account is a bank account that lets you easily access your deposited funds. You can do so by writing a check, but you can also shop online or use the debit card associated with your account. Checking accounts are available in several varieties, including basic accounts, student accounts and interest-bearing accounts. The benefits of using a checking account include the following:

  • They often don’t require a qualifying credit score.
  • They can be created for individuals, couples or corporations.
  • They can be used to receive direct deposit paychecks.
  • Most accounts can be accessed instantly online.
  • Many require just a small balance, making it a useful learning tool for teens.
  • Most accounts offer optional overdraft protection to keep your account balance from going negative.

Monitor Your Checking Account Balance and Transactions
Balancing your checking account provides a variety of benefits. You can spot bank or payment mistakes faster, reduce the risk of financial theft, limit overdraft fees, and recognize spending patterns that may enable you to spend less. Balance your checkbook by monitoring transactions, checking monthly statements and reconciling expenditures.

Monitor and Document Transactions: According to Dave Ramsey of the Lampo group, a balanced checkbook starts with keeping track of every transaction you make. If you physically write out checks, then the register is a good place to note everything you spend. Otherwise, you could use a spreadsheet on your computer, a financial application for smartphone or computer, or a receipt book where you keep receipts from every purchase made using your checking account.

Check Your Monthly Account Statements: Whether you get your monthly account statement mailed to your home or receive it electronically, you’ll want to get in the habit of checking it every month. Read it line by line to make sure that nothing stands out as incorrect. Common mistakes and warning signs to look for on your statement include:

  • Unusual expenditures
  • Charges from vendors you don’t recognize
  • Mathematical errors

Reconcile What’s Spent with What’s Left: To keep your balance in the green and out of the red, keep track of your checking account deposits and withdrawals.  In the Bankrate article Why Balance Your Checking Account, the author states that reconciling your spending with your balance helps keep you from overspending, which could lead to overdraft fees or checks being returned due to insufficient funds. A great way to stay ahead of spending is to keep a running balance of what’s available in your account. Even before a check has been cashed, it should be recorded so that you know exactly what is in your account at any given time.

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