You need to stay current on what’s in your checking account.
It’s easier than ever to keep track of the activity in your checking account. The details of each credit and debit transaction, the type of transaction it was, and the current balance are available online all the time. Regularly scheduled debits that are due but have not yet been paid may be listed as pending.
Once a month, though not always at the end of the month, activity in your account is compiled in a statement that may be mailed to you, can be downloaded as a PDF file, or both. Statements going back several months or longer are also available, but you may have to request that they be retrieved from the archives.
While there is sometimes a fee for checking your account balance at an ATM, it’s easy—and free—to access your account balance online or from your mobile phone. That means you should never tap your overdraft line of credit accidently or have a withdrawal refused for insufficient funds. But you do have to make the effort to check on a regular basis.
If you still use paper checks, your checkbook will have a recordkeeping system, whether as a separate ledger, stubs attached to the checks, or a carbon-copy of the checks you write. None of these is especially useful for keeping a running tally of your account if you also make electronic payments. But they can be helpful in confirming that you have, in fact, written checks to specific payees and that the amount of each check is accurately reflected in your statement or online account details.
GETTING IT WRONG
You’re not likely to find many mistakes in bank statements. But you should regularly compare your own records— such as ATM and debit card receipts and regular direct deposits of your paycheck or other income—to what your account details or monthly statement show, since mistakes can happen. Generally you have 60 days to report problems with electronic fund transfers (EFTs), but only 14 days for other types of errors. The sooner you notify the bank, the better. And always follow up a verbal report with a written one.
What’s more likely to happen is that your sense of what’s in your account is different from what the bank detail shows. If you’ve underestimated your account balance, which probably doesn’t happen very often, it may be that you’ve forgotten about deposits you’ve made, especially as deposit slips have become extinct.
If you chronically overestimate your balance, however, chances are you need to pay more attention to what you’re spending, especially if you pay for most purchases, even small ones, with plastic and don’t keep the receipts.
Some employers use payroll cards to pay salary or wages, either instead of, or in addition to, direct deposits to your bank account or paper paychecks. Some payroll cards provide monthly statements that:
- Allow you to track your spending
- Limit the number of fees
- Provide FDIC insurance and reimbursement of remaining balances if the card is lost or stolen, though you may have to pay for a replacement card
But all cards are not created equal. Some have fewer consumer protections and higher fees. And some seem downright predatory: They may include charges for inactivity fees, for all ATM withdrawals after the first or second one in a month, and for each purchase you make.
If your only option is a payroll card, and the fees are eating up too much of your pay, you should complain to the Consumer Financial Protection Bureau at wwwconsumerfinance.gov and your elected representatives. The purpose of payroll cards is not to create a financial drain on employees.
CASH ALMOST INSTANTLY
You can use authorized non-bank institutions, such as MoneyGram and Western Union, to transfer money in as little as ten minutes or up to three days for a fee that’s determined by the speed of delivery, amount of the transfer, and the destination, which may be domestic or international.
Sometimes a payee will require a check that guarantees payment will be made. That generally means having a personal check certified or using a bank check or money order.
When you write a certified check, your bank puts a hold on the amount of the check, and stamps certified on the face. There’s no limit on the amount of the check, provided you have enough money in your account to cover it. When it’s cashed, the amount is debited and shows up in your bank statement.
To arrange for a bank check, you tell the bank teller how much the check should be for and who the payee is. You then either write a check to the bank or debit the amount from your account. The check, which comes with a carbon copy for your records, is machine printed and signed by a bank officer.
The same is true of a money order, which you can purchase from a bank or a post office. The fee is often higher at a bank, but the limits on the amount of the money order are also higher.
With all these guaranteed payments, once the document has been sent or given to the payee, you can’t stop payment. And with bank checks and money orders, there is no confirmation in your bank statement or elsewhere that payment has been made.