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Checking and Debit Accounts, General Information

Updated on July 31, 2017
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Budgets and bookkeeping have always come so easy to me. I had planned to be a CPA, but life kind of got in the way.

The checkbook register is your lifeline for your account.


Checking accounts can be so confusing...

You check your balance and find you have lots of money in the account, so you use it. Then you find out that you had checks and charges that hadn't gone through your bank yet. Uh Oh!

Be prepared before you start your account, and take the few moments needed each time you use money to keep it up to date! To do that, you need to use a check register (to the right). This will be your lifeline to your bank balance at all times. Since most people now use ATM's, they rarely record the amounts until it is too late. Don't be too late.

Ask the following questions before opening a checking or savings account:

  • Are there any fees (how much and why)?

  • Is there a minimum balance required?
  • Is there any way I can avoid fees such as direct deposit or maintaining a certain balance.
  • How much do new checks cost and can I buy them outside the bank?
  • Can I get overdraft protection-what will it cost me?
  • When will my statement come in? Be sure you balance it, also known as reconciling, right away.
  • Can I use on-line banking and what will it cost me?
  • Can I use a Debit Card with this account, is there a fee for using the Debit Card?
  • Is there a fee for using the ATM? Is there a maximum amount I can withdraw using my Debit Card and the ATM? Is there a fee for using an ATM not affiliated with this bank?
  • Are there any check usage fees?
  • Are there any account dormant fees (fees attached to your account if you do not use it for a certain period of time-usually pertains to savings accounts)?
  • Ask if you can have a list of policies and fee schedules. Have them explain the policies so you understand them. Don’t be afraid to ask about each and every policy in the flyer, you have a right to know what you are getting into!

Go to a different bank if fees are high or numerous and/or if there are hidden fees like check usage fees and fees to use the Debit Card. Try a local bank or a local Credit Union which usually have better and less fees and are more willing to disclose options for their accounts in understandable wording.

Remember, this is your account not the banks. Don't let them pressure you into doing anything you are not ready to do; especially if you do not understand.

What the register looks like as it is filled out.
What the register looks like as it is filled out. | Source

How it works

Bank accounts can be confusing, especially in this swipe and go economy. Everything is rush, rush, rush and you grab your receipt, put it in your pocket or toss it in the trash and continue with your day. At the end of the month when you get your statement, there will be lots of charges on there that you might not even remember doing. If you can't record all of your checks and/or ATM swipes in your check register, try keeping the receipts. You could put a tin in your car and toss them in there until it is time to balance the account. Or you could take a moment when you get where you are going to record them in your register.

It really isn't all that complicated once you get the hang of it. You need to record and balance your check register to see what you have in the bank. If you check your balance electronically (using the ATM), you might see that you have more money than your actual balance. How? Because although most things are now electronic and seem to take place in moments, banks still have to clear each item. Sometimes that is almost instantaneous, and sometimes it might take a day or two. And checks take more time to clear, but will eventually clear. If you have used the money, thinking it was still in your account, you could overdraft your account. Especially if you are using your ATM at a gas station. Many gas stations have a policy of holding up to $100 until your actual amount clears. Usually three days later. Financial advisers suggest that you use a credit card for gas just to keep your check funds free for you to use (and to prevent an overdraft).

Example of how your account can be quickly overdrawn if you do not monitor it.

Balance in account
Fees and charges
New Balance
$25.00 overdraft protection fee
$10.00 under limit fee
$20.00 gas
$100.00 Gas station hold
$700.00 fun and souvenirs with friends at the local carnival
$150.00 supplies for Bachelor Party
-$5.00 your account is overdrawn

Overdraft or insufficient funds

These two items are basically the same thing. They are also things you don't want to see when you have a checking account. These items mean you have written a check (also called bouncing) that is more than the balance of your account. Doing this once might be an accident, but this practice is illegal (especially if you know you do not have enough money when you write the check). If you bounce a check, your bank charges a fee and so does the company, depending on if your are using a check or your ATM. Generally if you use an ATM, your card will be refused at the source.

Can you protect from this? Yes, you can ask the bank for overdraft protection. They will usually charge a small fee each month for this service and will pay the amount that is over your balance. Be sure to ask how much they will protect. Also, if you overdraft often, the bank may refuse to continue covering the amounts. Be prepared to cover the amount you were over you balance, because the bank is only temporarily 'loaning' you the money. You will have to cover it as soon as you can. Any deposit you make into your account after overdrafting, will be used for the amount and any fees before anything else.

How to write a check

When you open a checking account, the bank will give you 'generic' checks so that you can use your money right away. Unfortunately, most companies won't take these checks because they are written on a new account. All of the information is handwritten, like your address, phone number, and checking account number. This means they could be fake checks which will cost them money. Once you get your new checks in the mail or from your bank a few days after your account is opened, all of that information will be pre-printed.

To write your check is as simple as 1, 2, 3. (Follow along with the examples above).

  • Example #1: Make sure your address and phone number is correct on the check. Check the check number and the account number as well. This should be done as soon as you receive your checks.
  • Example 2: Make sure the check number is correct to ensure you aren't missing any.
  • Example #3: Date the check.
  • Example #4: Write the name of the person or company receiving the check.
  • Example #5: Put the amount of the check using numerals. Always put the change amount as a fraction over 100 to indicate that it is not a whole dollar amount.
  • Example #6: Write out the amount of the check on the next line in written words. Be careful to write both amounts carefully because if they don't match, the company is forced to take the amount written in words.
  • Example #7: Put any memo information (such as paid in full or electric payment) on the memo line (this line is to help you remember what the check was written for). You do not have to fill this line out if you do not want to, it will not change how the company accepts the check.
  • Example #8: Sign the check This is critical because the bank will not accept the check for payment if it hasn't been signed.
  • Be sure to record the check in your check register!
  • Many companies use electronic checks now. You write out the check and give it to them. They run it through their system and the money is automatically withdrawn from your account. Then the check is your receipt. You cannot use this check for anything else.

Writing checks
Writing checks | Source

Just a few more items as an FYI

  • ATM’s can be even more confusing than checks when it comes to accounting for the money. Be sure to write all transactions in your register and balance each time.
  • If an account has been compromised in any way, the ATM is instructed to withhold your card. (You will have to go to the bank during business hours to retrieve your card.) Common compromises are someone else has used your account, you have reported your card or check book stolen, or excessive ATM usages.
  • Banks are not infallible and can make mistakes-check bank statements carefully. Check all check and deposit amounts carefully (in your check book AND on the bank statement) and look for fees that you were not aware of. Always ask if you are not sure and be sure to go to the bank and seek a meeting with a supervisor if your bank statement and checkbook do not balance.

© 2012 Cheryl Simonds

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