How to Balance Your Checking Account

Today with direct debit, direct payment and ATMs, the average person writes a lot fewer checks than ten years ago -- but the fact is, he or she still unintentionally bounces a couple per year.

Follow These Easy Steps To Keep Your Checkbook Balanced:

1. Every time you make a deposit, write a check, take money from an ATM, make a telephone or on-line banking transfers or payments, pay for an item using a direct debit (point of sale) card, or make or receive a pre-authorized automatic payments or direct deposit, write it down in your checkbook immediately. Don't wait 'til later and rely on memory. Keep your receipts to remind you of any transactions you make. Even better, almost every bank today offers on-line banking that lets you keep track of your account on a daily basis. It's a really good idea to go on-line at least once a week and check whether you've actually entered all those expenditures and ATM withdrawals in your checkbook.

2. When you get your statement, get out your check register and look at the transactions listed on the statement and the check register. Compare. Does every transaction listed on the statement also appear in your check register? An easy way to keep track of matches is to make a small check mark next to each entry in your checkbook register and on the bank statement.

3. If there are any transactions that appear on the bank statement, but not on your check register, add them to your register.

4. Add in any interest you may have received on your account and subtract the monthly bank service charge(s) and recalculate the total amount in your account according to your register.

5. At the end of the bank statement there's a space to write in missing transactions. Add here any transactions that you made but that don't appear on the statement. Also add any checks that you wrote and withdrawals or payments that you made since the date of the statement. Do the same for deposits. Then recalculate the amount that should be in your account according to the statement by subtracting the total amount of withdrawals/expenditures from the total number of deposits.

6. Look at the ending balance on your bank statement and the balance in your checkbook register. At this point, they should be the same.

7. What if they're not the same? Don't panic. You've probably made one of these common mistakes:

• You forgot to subtract from your bank statement outstanding checks from two months ago.
• When you began a new page in your checkbook register, you didn't carry forward the correct balance.
• You may have added when you should have subtracted.
• You may have transposed numerals when you made an entry. In other words, you wrote $23 when you meant $32. If you can divide the difference between the bank statement and your checkbook register evenly by 9, this could be the case.
• You may have forgotten to list an outstanding check in your register.
• You may have forgotten to add in an interest payment or service charge.

Tried and tried and still can't balance the account? Don't worry. Stop at your local branch office and one of our customer service representatives will be happy to help you.

What If I Overdraw My Account?

Dealing with overdrafts can be a big hassle, and if you overdraw your account often, it can have a negative effect on your relationship with your bank, the people you pay money to, and your credit rating. The best policy is to avoid overdrafts. Yes, they happen to everyone, even when you're careful, but there are ways to minimize the chance of them occurring.

• Keep your records up to date. Don't rely on memory.
• Balance your account monthly, as soon as the statement arrives.
• If you're worried about covering an upcoming item, check your balance. You can do this any time of day with telephone banking and on-line banking. Most ATMs also will give you a mini-statement with the current available balance.
• Rather than risk being overdrawn, make a deposit right away. If you have more than one account at a bank, most banks can set you up so that you can make direct telephone or on-line transfers between savings and checking or even a credit card.

Try your hardest, but an overdraft still happened? Here's what comes next:

• The bank declines payment of the check or withdrawal.
• Your bank charges you an overdraft fee, which it takes out of your checking account.
• It returns the check to the Federal Reserve Bank that submitted it for payment. The Federal Reserve Bank, in turn, returns the check to the local bank, which then returns the check to the person or business who deposited your check in their account.
• At the same time, the bank of the person or business who deposited your check in their account removes the amount of the check from the payee's bank balance.
• It is now up to the person to whom you gave the check to either redeposit the check a second time or contact you for payment. A bounced check can be deposited twice.
• Hopefully, by now you have made a deposit to cover the check and it is paid out.
• If, however, you neglected to cover the check, you will be charged an additional overdraft charge. The check will be returned again to the payee, who will contact you directly for payment.

By now you Overdrawing your account and bouncing a check has several consequences:

• You lose the good will of the person or business to whom you wrote the check. Good will is an extremely valuable commodity. Fortunately, there is a way to regain their good will. As soon as you suspect there may be trouble - and before they contact you - call the person or business and explain what has happened. Apologize and offer to make it good right away. (If you've made a deposit to cover the overdraft, tell them that they can safely redeposit the check. Some businesses or people may want cash, though, so be prepared.) Being proactive like this shows you care. It will usually smooth things over.
• The bank takes an overdraft charge out of your account. This lowers the balance of your account beyond the amount you suspect is overdrawn. It's important, when you make a deposit to cover the amount of the deficit plus the overdraft fee.
• If the amount of the check that you bounced was high, it's considered a felony. You could be liable for criminal charges. If you're convicted, you may have to spend time in prison or pay a fine.
• One or two overdrafts a year is normal, but if you bounce checks on a regular basis, it will affect your relationship with the bank when it comes to taking out a loan, and it could affect your credit rating, as well.
• On the other hand, if you seldom overdraw your account and make regular deposits– especially if you are on a salary direct deposit program - the bank may choose to honor the overdrawn check, since it knows the money will be deposited in your account in a day or two. It will still charge the overdraft fee, though.