Tips for Managing Your Checking Account

The money in your checking account is for paying your bills and covering everyday expenses. Mismanaging your account can be expensive, resulting in overdrafts, fees, and a myriad of other financial problems. You should keep at least enough money in the account to cover the expenses you have coming due before your next payday. It’s possible to have too much money in your checking account.

Any money that you don’t need for bills and regular expenses may be better in a savings account, money market account, CD, or other interest bearing account. That way, you earn interest on that money. There are some checking accounts that pay interest, but these often have minimum deposit requirements, e.g. $10,000 or higher. Consider an interest bearing checking account if you have enough money to

Sign up for online banking and monitor your checking account often. Online banking makes it so much easier to stay abreast of your account standing. Most banks and credit unions let you create online accounts these days. Some even have apps you can download to your smartphone making it even more convenient to monitor your account.

Here’s what you’re looking for… First, you should check to see that the transactions you’ve made have cleared and for the exact amount. Reviewing your checking account often will also help you remain aware of your current balance. You’re less likely to accidentally overdraft your account because you know how much money you have available. Finally, review your checking account for instances of fraud. If you notice unauthorized transactions, contact your bank as soon as possible.

Know your fees. Free checking accounts are not as common with big banks as they were a few years ago. The good news is that you can often avoid paying a monthly checking account fee if you meet certain requirements, like a direct deposit or minimum average daily balance. If your account comes with a fee, it will be deducted directly from your account balance. That will reduce the amount you have available for other transactions. Besides regular maintenance fees, your r account may also have transaction-based fees, like ATM fees or overdraft fees. Make sure you’re aware of these fees and when they’re charged.

Link it to a savings account for overdraft protection. When you make a transaction that would overdraft your checking account, your bank will transfer money from your savings account to cover the transaction. There’s usually a fee for this courtesy, but the fee is lower than what it would be if you paid an overdraft fee.

For overdraft protection, a savings account is better than a line of credit or credit card. Overdrafts to a credit card may be treated as a cash advance, charged a cash advance and a higher interest rate than regular transactions.

Otherwise, you can opt-out of overdraft transactions. Debit card transactions that would overdraft your account will be declined. Checks, on the other hand, can sill cause you to overdraft and incur associated fees.

Read the mail from your bank. Even though you may stay updated on your account via online banking, it’s still important to read your bank statement and other mail from your bank. Notifications of important account changes will often be sent to you by mail. If you simply toss your mail, you’ll miss these.

When your checking account houses your hard-earned money, it’s important to manage it well. Don’t let checking account mistakes avalanche into bigger financial problems.