Jakob Jelling

How checking works

Help yourself avoid overdraft fees by understanding checking.

While there is a lot of attention put on people who get into financial trouble based on the amount of money that they charge to their credit cards, that is not the only problem that people commonly have.  For instance, checking accounts can cause trouble as well, especially if you do not know how checking works.  Therefore, before you start using your checking account frequently, you should find out exactly how your checking account works.

Your checking account is just another bank account, though it is usually not the same or attached to your savings account.  Many people find it worthwhile to have both a savings account and a checking account.  The reason for this is that you get interest on your savings in the savings account - while in a checking account, you have more freedom with when and how you withdraw your money.

When you write a check, it is true that the money will not be taken out of your account immediately.  However, trying to beat the system and writing checks before you have money deposited into your account is a good way to get into trouble with bounced checks.  This is why it is important to keep a detailed checkbook, so that you will know exactly how much money is in your checking account at all times.

One thing that you should keep in mind, as well, is that in most cases, debit or check cards will withdraw the money from your account immediately.  Therefore, you should make sure that you count these transactions in your check book just like you would any other transaction.

Another tip that you should think about is that it is usually a good idea to keep some extra money in your checking account.  If you have a $200 buffer, then you'll be able to take care of business if something unexpected should come up.  For instance, if there is an emergency and you need to spend money at first, then the extra money in your account will come in handy.  This is also useful just in case you are waiting for a deposit into your account and it is late.

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