Checking Accounts

One of the main differences between a checking and a savings account is that a checking account is known as a transactional account. This means that a checking account is designed to have a lot of incoming and outgoing transactions into it, typically without a limit as to how many transactions can be done. A savings account usually has a limit on how many transactions can be done. Some savings accounts have a limit of only 3 transactions per month, which can make making everyday purchases a challenge.

Another difference between a checking a savings account is that a checking account typically comes with a debit card. A debit card is a secure way that allows you access to the money in your account when making purchases in stores or online as well as access to withdrawing cash at ATMs. You may receive an ATM card with a savings account, but this limits you to only being able to access your funds at an ATM.

The last major difference between a checking and a savings account is that a savings account typically earns more interest than a checking account. Checking accounts are designed to be a spending account as opposed to a money-growing account and therefore most don't provide you with a return.

The current balance in your account it the total amount of money in the account. However, it is best practice to not go off the current balance of the account. This is because the current balance may not include any items that are on hold in the account, any checks you've written and haven't cleared, or any items that just haven't posted yet.

The available balance in your account is the balance in your account minus any hold on the account. You will notice that most of the time the current balance and available balance are different, especially if you regularly use your debit card or write checks.

While the available balance gives a better picture of how much money you have available to spend, it still does not give the full picture. Sometimes money you spend won't be on hold or be pulled right away, or checks you've written may not show, or it simply doesn't show money you need set aside for a bill that will pull from the account later. This is why it is important to keep some kind of register, also known as a cash disbursement journal. A register is basically a way for you to manually keep track of the transactions on your account. The idea of keeping a register may seem outdated, but the whole point of it is to help you know what your actual, at-this-moment balance in your account is. The good news is that you can keep track of this through various apps on your phone or even in just a notebook.

- How to Balance My Check Register
To start, you will need to know the actual balance in your account. The easiest way to do this is to not use your account for a few days to give the purchases you have made time to clear your account. From there, you will just want to track any incoming and outgoing transactions on your account. If you get your paycheck, for instance, you will add the amount of your paycheck to the balance in your register. Any expenses, like bills or groceries, get deducted from the amount in your register. You can also write down any bills you know will be automatically paid in the next few days, like your electric bill. Doing this allows you to have an up-to-date exact calculation of how much you have in your account available to spend. The "balancing" of a register comes with checking your tracked account activity against the activity on your account statement from your financial institution.

- Why Should I Keep a Register?
The thought of adding yet another thing to keep track of in your day-to-day life can be overwhelming, or may even be seen as pointless. There are a few really good reasons to keep a register, and most are to help protect you and your money.

- See Your Actual Balance
Knowing what the actual balance of your account is will help you keep track of your spending and help avoid those pesky overdraft, transfer, or non-sufficient funds fees.

- Identify Fraud
Keeping track of your incoming and outgoing transactions and comparing them against your transaction history provided by your financial institution can help you identity fraud early on. You may end up noticing that a transaction has posted to your account that shouldn't be there. Catching these transactions and alerting your financial institution can help correct them quickly, limit your liability of the unauthorized charges, and help prevent more fraud on your account.

- Identify Errors
When comparing your activity to your bank statement, you may end up noticing that the amount of a transaction you wrote down doesn't quite match up with the amount actually charged. Sometimes merchants charge the wrong amount or accidentally charge double. Catching these incorrect transactions quickly can help you reach out to the merchant with a higher chance of getting your money back.

- Overdraft
Overdraft fees are given when you spend more money than what you have available in your account. There is potential to get multiple overdraft fees in one day if multiple transactions hit your account and you do not have the funds to cover them. Most financial institutions offer some form of overdraft protection to help limit the amount of overdraft fees you may receive. It is always a good idea to keep an eye on the balance in your account before spending any funds though, as some overdraft protections may only cover specific transaction types meaning you may still get a fee.

- Non-Sufficient Funds
A non-sufficient funds fee is given when you make a payment without having enough funds in your account, typically by using a check. This can also happen when you try to deposit or cash a check and the issuer of the check doesn't have enough funds in their account to cover it. This may sound pretty similar to an overdraft fee, but in the case of a non-sufficient funds fee, the person who is to receive the money doesn't get the money, unlike an overdraft, where the person gets the money from the transaction.

- Below Balance
If your account falls below the minimum required balance, some financial institutions may charge a below balance fee. Sometimes these below balance fees are charged daily for each day your account is below the minimum required balance.