Checking Account Basics

What you should know about using checking accounts

Nowadays, it seems like nearly everyone has a checking account. It would seem, therefore, that most people are experts when it comes to checking accounts. That isn’t true; however, most people know how much money is in their checking account and not much else. The following information can help you learn about the different types of checking accounts and what options you have for opening checking accounts.

They offer more flexibility than a savings account
“A checking account differs from other bank accounts in that it often allows for numerous withdrawals and unlimited deposits, whereas savings accounts sometimes limit both,” according to Investopedia.

This flexibility is the tradeoff for having lower interest rates than savings accounts. Your checking account is the one that you will draw from when you need immediate money to pay for things like bills, groceries or online purchases.

Money can be deposited automatically, such as from your paycheck, or it can be deposited at an ATM or through a teller. Many financial institutions also offer mobile deposits, which only require taking a photograph of a check on your smartphone.

There are many options for withdrawing also, such as using a debit card or a check at a store or by using an ATM card to withdraw cash. You may also be able to pay bills online, directly from your financial institution’s website.

There are multiple types of checking accounts
Many people don’t realize that there’s more than one type of checking account, and that mistake can be costly.

“Checking accounts can include business accounts, student accounts and joint accounts along with many other types of accounts which offer similar features,” states Investopedia.

Making sure to open the correct type of account means that the account will best suit your needs. Student accounts are beneficial to people who may not meet deposit or balance minimums, while business accounts maximize the benefits that entrepreneurs need most and help business owners keep their personal and business finances separate.

Each person can have more than one
In addition to the fact that there are multiple types of checking accounts, many people don’t realize that they can have multiple of the same type of checking accounts at anytime. Having multiple checking accounts is even encouraged by some financial experts, as an easy way to budget and prevent overspending on certain expenses.

For example, many couples prefer to maintain separate accounts for each partner while also sharing a joint account for bills and other family-related expenses.

“This allows couples the flexibility to make independent financial decisions, since not every financial decision is going to involve both parties,” says certified financial planner Kristen Euretig for Fox News Business.

Other families may wish to split accounts even more, such as having one for account for rent and utilities, another for food and so forth. This makes it easy to see if there is enough room in the budget to head to a restaurant or if cooking at home is a better idea.

You can mix online and brick and mortar accounts
You may also wish to add an online checking account to your portfolio in order to earn money with a higher interest rate. This can be a profitable choice for people who find the restrictions of savings accounts difficult to adhere to, but who still want to find a great interest rate online. Using an online checking account, while maintaining your accounts at your local bank, gives you flexibility because your money is always nearby if you need to make a withdrawal or if you have questions to ask someone in person.

“It absolutely makes sense to open a second account with an online [institution] for a higher yield,” states Euretig. “In addition to higher rates, online accounts often have useful savings features that make it easy to set up automatic savings plans that draw from a traditional brick-and-mortar bank account.”

Many financial institutions offer online banking options
If you don’t wish to open an online only account because you like the option to make easier deposits and withdrawals, you may still be able to take advantage of the ease of online checking if your financial institution offers online tools. Many small community-based institutions now offer mobile tools and online banking options that rival or even exceed those offered by the national chains, so be sure to ask your bank about the options available to you.


Used with Permission. Published by IMN Bank Adviser
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Overdraft Protection 101

Learn the ins and outs of overdraft protection

Have you ever made a transaction and caused the balance of your account to dip below zero? That’s called an overdraft, and it’s a common occurrence among many. In fact, nine out of every 10 Americans have a checking account, and 18 percent of them have endured an overdraft within the year, according to a 2012 Overdraft America study.

Some of the most frequent times an overdraft can happen are when someone cashes a check before money was deposited, when an automatic payment withdraws money before money was deposited into the account or during other banking miscommunications — especially if your account has cash going in and out multiple times a day, things can certainly get confusing.

Financial institutions know this is a common situation. That’s why many of them offer overdraft protection, a protection program that covers the amount of an overdraft — whether it be ATM withdrawals, debit card purchases or electronic transfers and bounced checks. Essentially, overdraft protection will provide you with an instant loan instead of charging you a hefty fee for a bounced check.

Another option for overdraft protection is linking your account to a savings or other account, where money can be transferred over from in the event of an overdraft. Also, some financial institutions allow the use of a credit card as a possible overdraft protection.

“It’s a good idea, assuming the fees are reasonable and the credit card rates are reasonable,” says Jean Ann Fox, director of consumer protection for the Consumer Federation of America.

“It just gives customers another option,” says Mary Beth Navarro, a retail financial institution customer service manager. “Not every customer has a savings or money market account. And it’s less expensive than if you were to have an overdraft.”

However, there’s some controversy about overdraft protection programs. Some experts, like Greg McBride, CFA and Bankrate’s senior economic analyst, see a few bugs in the system.

“It doesn’t relieve consumers of the obligation to keep accurate tabs on their account balance,” he says. “Even though an ATM or debit card transaction won’t go through without our prior consent, if the balance is that low, the check written yesterday won’t clear and the online payment scheduled for tomorrow won’t clear.”

And keep in mind that if you’re consistently enduring overdrafts on your account, the fees could accumulate quickly, as many financial institutions do charge when the account balance is below zero (although the fee is typically less than that of a bounced check).

“A lot of people use their debit cards several times a day, so you could easily rack up hundreds of dollars worth of fees,” points out Leslie Parrish, senior researcher at the Center for Responsible Lending in North Carolina.

Either way, no one can argue the many pros that come out of overdraft protection. If you’re deciding whether you should get overdraft protection, give us a call or stop by today to see how we can help you.


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Staying on Top of Your Checking Account

Chances are you haveCheckingAccount a checking account that you use all the time, depositing paychecks, using a debit/check card, maybe even making automatic payments for regular bills. But when’s the last time you sat down and went over your account to make sure it’s all in working order?

Under the law, every financial institution is required to send you a monthly statement for your checking account. It might be sent by mail, or if you chose the electronic option most financial institutions offer these days, you’ll receive a monthly e-mail notification when your new statement is ready to view online. However you get your statement, it’s important to actually look it over every once in a while.

“While balancing a checkbook may seem like a thing of the past, the principles behind this practice are as valid as ever,” says finance columnist Andrew Freiburghouse. “In addition to preventing overdraft fees and catching erroneous charges, properly reconciling your checkbook can also allow you to take a better look at your financial habits.”

In other words, staying on top of your checking account is about more than making sure your financial institution hasn’t made any mistakes. It will also help you plan and keep a monthly budget. And if simply looking over your statement isn’t enough to give you a firm grip on the ins and outs of your checking account, there are plenty of tools that can help — even a simple spreadsheet can do the trick.

“We have columns for rent, dining, groceries, insurance, etc., with monthly targets,” says business owner and household financer Mandy Minor. “As I input our expenses, they get added up, so we can see in a second if we were over, under or on budget. Each month is a new sheet in the workbook, so it has years’ worth of data that’s easy to get to.”

Keeping a weather eye on your checking account is worth the time, but if you have a nice handle on your budget and are familiar enough with your personal finances, a monthly check-up doesn’t have to take too long.

“If you’re pressed for time, you can get away with examining just the account summary,” says financial adviser Susan Zimmerman. “It’s usually listed at the top of the page and it recaps the state of your account: previous balance, deposits and credits, checks and debits, service charges, interest paid and current balance. At a bare-bones minimum, look over the summary information and see if the figures are in the [ballpark.”]

If a quick scan of your checking account summary shows any discrepancies, delve a little deeper. Be sure to contact your financial institution immediately if you see anything amiss — the sooner you start dealing with any problems, the easier they will be resolved.

So take the first step in financial control and make sure you’re checking in with your checking account regularly. Your savings and investments will thank you.


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Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Five Good Reasons to Have a Checking Account

Checking accounts provide proof of payment, security, convenience and help people monitor and budget their finances

It wasn’t all that long ago that having a checking account was a given, since writing a check was often the only way to pay for goods and services. Spending habits have evolved, but checking accounts are more important than ever, providing proof of payment, payment security, ease and convenience, a way to monitor spending and assistance with budgeting.

Proof of payment

Checking accounts are the ultimate paper trail. Not only does the user receive a monthly statement of checking account activity, checks can also be documented in one’s check register (checkbook) and via a carbon copy for those using duplicate checks. Moreover, most financial institutions will store an electronic image of every check and can make it available upon request.

“Checks provide a paper trail or written proof that you paid someone,” notes the EverythingFinanceBlog.com. “Each time you write a check that ultimately clears your account, there will be several records of it. Having this proof is important for tax purposes (when you make tax deductible charitable donations) and whenever you are paying a person or company by mail.”

Payment security

Checks are, of course, a secure way to send payments through the mail, as they have been for centuries. While money orders provide another option, they are more expensive, require a visit to a financial institution or other issuer and are less convenient if proof of payment is needed down the road.

Money orders pose “a paper-trail concern. While money orders can be tracked, it may not be as convenient as having the backing of the [financial institution] in the event your payment doesn’t make it to your creditor,” says MSN.com.

Ease and convenience of payments

Having a checking account also makes it easier to make electronic payments. “There are many ways to conveniently access your checking account that other types of accounts don’t offer” and, unlike savings accounts, “checking accounts have no Federal limits on the number of electronic transfers you can make each month,” from the website EverythingFinanceBlog.com explains.

Monitoring spending habits

Checks, checkbook registers and the monthly statements provided by financial institutions are all great ways to recall recent payments and gain a better understanding of your spending habits.

“If you spend only in cash and do not write down what you spend or where, you lose the ability to have accurate financial records for planning purposes,” adds MSN.com. “[An] account provides a monthly statement, which shows what you spend and where you spend it. These statements may be necessary at some point in your life, especially if you want to buy a home or qualify for a personal loan.”

Developing Healthy Budgets

Opening up dedicated checking accounts for either specific monthly spending needs or for certain members of the family provide an effective way of increasing frugality and meeting budget goals.

For example, husband and wife checking accounts that receive monthly deposits from a general family checking account allow each person to pay for the responsibilities that are expected of them with some room for fun and spontaneous spending that doesn’t go overboard.

“Husband Checking and Wife Checking accounts” give “each parent autonomy to spend however they see fit while still being held accountable for the overall budget amount,” the website FunCheaporFree.com says. “It motivates them to be frugal where possible” and will “help allocate spending responsibilities for a family, making ‘who is in charge of what’ clear and concise, and makes setting and maintaining a family budget much easier.”

There are a number of reasons to keep a checking account—or multiple checking accounts—including proof of payment, payment security, payment convenience and the ability to monitor spending habits and develop healthy budgets. Advantage One can easily add a checking account to your eCount. We also offer a host of online services that can make using your account a breeze. Visit us online, call us (734.676.7000), or drop by one of our branches for more information.


Used with Permission. Published by IMN Bank Adviser
Includes copyrighted material of IMakeNews, Inc. and its suppliers.