Since money doesn’t grow on trees, smartly managing your checking account is critical to your financial security. There are several ways to properly manage your checking account, which I’ll share with you here, along with a few tips for adding a little more to your account’s bottom line:
1. Know the rules and fees associated with your checking account
Most checking accounts—especially those offered by big banks—come with rules, restrictions, and fees, and it’s essential that you know just what they are to avoid penalties.
Do you have to keep a minimum balance in your account at all times? Are you required to pay a monthly maintenance fee? How many transactions do you have to make a month? Depending on your financial institution, you can be penalized for not meeting these requirements.
Now, not to brag or anything, but when you bank with State ECU, you have the option of a Kasasa checking account, which does not require a minimum balance, doesn’t charge a maintenance fee and even offers cash rewards. All of State ECU’s rules and requirements for checking accounts are clearly listed on their website and the fees are spelled out here.
2. Avoid overdrafts
Spending more money than you have in your checking account is the quickest way to rack up hefty penalties. Most banks charge $35 per transaction, so say, if you have $50 dollars in your account and you make three purchases each costing $25, you could end up owing $155.
To avoid overdrafts, keep track of how much money you have in your checking account at all times. One way to do this is to write down every transaction either in a check register, a spreadsheet on your home computer, or input them into one of the many money management apps available today.
Trying to keep track mentally can get you in trouble. It’s too easy to forget the unexpected incidentals that pop up, like that trip to Walgreen’s that cost you $15, or the game-time decision latte you grabbed on your way to work.
If you don’t have time to record every transaction as when happens, another option is to save all your receipts for the end of the day, and then enter them all at once. (If you’re like me, you will revel in the OCD gratification of this task).
Finally, signing up for overdraft protection is another way to keep your checking balance in the black. Overdraft protection involves linking your checking account to your savings account or credit card, and the bank will automatically transfer funds into your checking account to keep it from going into the red.
3. Get a little extra with an interest-earning checking account
Some financial institutions, like State ECU, offer checking accounts that earn interest. Generally, the interest is calculated based on the balance at the end of the day and paid to the account holder at the end of the month.
The rates are typically low (around 2%) but still, some interest is better than no interest, right?
Just be careful: some financial institutions often place more strings on this type of checking account, e.g. high minimum balance requirement or a monthly maintenance fee. Just make sure you understand all the rules governing the account before you open it.
State ECU offers both interest and non-interest checking accounts, only one of which requires a $25 minimum opening balance. None of the accounts require monthly maintenance fees or high minimum balances.
4. Make your checking account give back (to you, of course!)
Checking accounts aren’t just for storing money. They can also be used to make a little extra cash—if you know where to bank. State ECU, for instance, offers monthly cash rewards for just having a checking account and doing a few small things, which aren’t difficult. Just make 10 debit card purchases per month, sign up for e-statements, log into online banking, and have at least one automatic payment (e.g. direct deposit) per month.
What tips do you have for managing your checking account or tracking your spending? Let me know in the comments section below.