Katie Stiner

Banks and financial institutions offer checking accounts to provide a convenient way to manage your bills and safely keep your money. You can easily access a checking account through your phone, online banking, and ATMs.

The bank also provides monthly statements to provide account balances.

The simplicity and convenience associated with checking accounts can lead to a sense of security. If you don’t pay attention to your account, issues can happen.

You can be charged hefty fees and penalties if you have a negative balance in your account and accumulate interest. The bank will close the account and report it to a consumer reporting agency that keeps track of banking history.

Before opening a new checking account, financial institutions check with the reporting companies. If you have a negative report, you will have a challenging time to open a checking account.

It is important to learn how to wisely manage your checking account to keep a positive account history.

1. Automate your finances

If you are receiving funds, go for direct deposit because you will receive money much faster than checks. This will also save you trips from going to the bank.

If your looking to save money, have an automatic transfer set up from your checking account to savings. This way, you do not have to remember every month that you have to save for your goals, and will also help you avoid misusing the amount meant for savings.

Bill pay function can properly manage your checking account. Having automatic payment for your monthly bills means you do not have to write and post checks to the billing company.

Additionally, you will be saving on processing fees that may be charged if you make credit card payments. Your billing company will more likely not charge a processing fee if you pay directly from your checking account.

2. Avoid overdraft fees

When making purchases or withdrawing from your account, your bank will allow you to use more money than you have in your account. The bank will cover the shortfall but at a costly fee. You have to restore a positive balance by depositing the overdraft amount plus the charges. Quickly settle the overdraft to avoid further penalties.

To avoid overdraft fees, you can:

  • Switch to a checking account not offering overdraft protection (non-sufficient funds fees can still apply if you go negative)
  • Opt-out of overdraft protection. Note you will likely still have overdraft for checks and online or direct debit even if you opt-out.
  • Link your checking account to another account with sufficient funds. The bank will then transfer funds to cover the shortfall at a much smaller fee than overdraft fees.

3. Consolidate your finances

Having several accounts to manage sometimes makes it difficult and time-consuming to track usage. You have to maintain a record of login information, different account balances, and which account to use to pay which bills.

If you have the same type of checking account and its purpose is also the same, then it’s best to consolidate the duplicate accounts. You will be simplifying your finances.

It will be easier to monitor your checking account and avoid potential fees.

There are several benefits of having multiple checking accounts, but only if they each have a unique purpose for your finances.

4. Spend what you only have in your checking account

It is important to learn not to write a check or make purchases without knowing if your account balance will be sufficient for the transaction.

Non-sufficient funds (NSF) fees are charged on accounts without overdraft protection, and an overdraft fee is charged on accounts with overdraft protection.

Both are excessively high and could negatively affect future access to financial services if not sorted on time.

5. Use your bank’s ATM

Many banks charge little or no fees if you are a customer and use their ATM. You will be charged for using an out-of-network ATM.

This is an ATM that belongs to a different bank.

You will be charged by both your bank as well as the owner of the out-of-network ATM.

Some banks reimburse fees paid for out-of-network ATMs.

Final thoughts

By properly managing a checking account, you are simplifying your finances and avoid being on the consumer reporting agency’s blacklist.

You can choose to close some of your accounts, sign up for mobile alerts and notifications, or change your old careless spending habits. Whatever you adopt will be your financial routine within no time.

Adopt a new system that will make it easy for you to manage your checking account.

Share your thoughts on managing a checking account below!

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