Checking accounts have traditionally been known to be a conservative type of banking account compared to savings or even, premier accounts. In the olden days, it remains but only a place where you store your funds with a view to making payments (checks) from it as and when necessary. No interests are paid out on such account and in most instances, a fee is payable for the maintenance of this account. In recent years, however, many banks have started to offer various benefits to their customers.
One of the many benefits offered is the overdraft facility. A pre-set maximum limit is given to you based on your financial and / or credit standing so that you are still able to issue payment which is more than the actual funds you have in your checking account. This is especially useful for businesses which require rolling funds.
With the widespread availability of internet banking, checking accounts are now usually linked to other accounts that you might have for instance, the savings or even housing loan account. In this way, you can make auto-debit instructions so that your bank can automatically pay off your preset payment for example, credit card debt, utility bills, insurance premiums and others. With auto-payment facilities, you don’t have to worry about missing out on payments.
Keeping your checkbook balanced is the most important part of owning a checking account. If you are not careful, you could end up bouncing checks, trying to spend money that is not in your account, and having to pay huge penalty fees because of it. Regularly balancing your checkbook will ensure that you always know exactly how much money is available in your checking account, even when there are transactions that have not yet appeared on your bank statement.
You will need your latest checking account bank statements, a record of the checks that you have written, your checkbook register and, probably, a calculator.
Go through your bank statement and make sure that all of the payments that have gone in and out of the account are correct. If there are any unusual payments or mistakes that should not be there, you will need to contact your bank to ask them to remedy the situation.
Every transaction that appears on your bank statement should be recorded in your checkbook register. There may be some additional transactions in the checkbook register that have not yet appeared on your bank statement. During the process of balancing your checkbook, you will identify these outstanding transactions.
Place a mark in your checkbook register beside every check that appears on the bank statement so that you know it has been deducted from your account. Do the same for deposits made into your account.
Check the ATM and debit card withdrawals made from your account and copy any that have not already been added into your checkbook register.
Make sure you remember to record in your checkbook register any interest payments or bank fees that have gone in or out of your account.
Write a list of any outstanding checks that have not yet been paid from your account and work out the total of these checks. Write another list of all the deposits that have been paid into the account, but which have not yet appeared on the bank statement, and work out the total.
Now you are ready to calculate your current balance. Begin with the ending balance recorded on your bank statement. This is the total left after all of the transactions that have already been recorded on your bank statement. Add to this the total of the outstanding deposits. This will give you a new total that also includes all the deposits that you are still waiting to see on the bank statement. Finally, from this new total, deduct the sum of the outstanding checks. This will give you the true balance of your checking account, including all outstanding checks and deposits. It is also the amount that you have available to spend in the account.
If you have correctly balanced your checkbook, without forgetting any transactions, then the total you have calculated should be equal to the ending balance in your checkbook register as well as to the amount available in your checking account.