Check Your Checking Account Knowledge
A checking account is a great tool to help pay those day-to-day expenses. These accounts are even more beneficial when they are properly maintained and balanced. Keeping a checking account up to date and balanced has many benefits, which include preventing overdraft fees, encouraging good spending habits, as well as not spending beyond an individual’s own personal means. In the electronic era the task of keeping and balancing a checkbook is thought to be outdated, but that is in fact not the case.
Benefits and Reasons to Balancing a Checkbook
One of the main reasons to keep a checkbook balanced is that it is a good way to verify records. Banks do not often make mistakes, but every now and again it does happen. Checking a bank statement against a balanced check book is a great way to find any bank errors. It is crucial to ensure that the checkbook is balanced monthly, because if a mistake is caught there is a limit of only 60 days in which a complaint can be made with the bank.
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Keeping a checkbook balanced is also valuable in the sense that it can save you money. Forgetting to document transactions such as ATM withdrawals and debit card purchases can result in bounced checks and overdraft fees. Bounced checks usually carry a fee of around 25.00 dollars for each one that is returned, and overdraft fees vary by bank. These fees add up very quickly. The worst case is if multiple debits are made after one large debit which overdraws the account—this means each debit after, even if it is only for one dollar, will incur an overdraft fee. Depending upon banks, these fees range from 20 dollars up to 40 dollars per transaction. It is hard to get these fees removed by the bank.
Using Online Banking Tools
Online banking tools are a great way to aid in the process of balancing a checkbook. The best way to balance a checkbook monthly is to sit down with the checkbook and the account summary from your online statement. This way it will take into account all transactions, as well as pending transactions like checks that have been written, but not cashed.
The online banking tools available from most banks provide many services that make it easy to keep finances in check. One useful feature is the ability to sort transactions by type (such as as food, entertainment, gas, retail, etc.—categorizations vary by bank). Banking tools also enable automatic payments to be debited directly from an account. This is a great tool to implement and will help make sure that late fees are not incurred if you forget to pay a bill.
Whatever method, or combination of methods, used to keep track of spending, it is important to monitor your checking account. Having a good handle on the money going into and being debited from a checking account is crucial if you want to avoid overdraft fees and have a handle on where your money is going.