Simple Ways to Manage a Checking Account

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There are countless reasons why opening a checking account is a wise move. In today’s world, having a checking account makes it much easier to get paid and a debit card easily facilitates ATM withdrawals, online transfers, and day-to-day transactions. Checking accounts are utilized in different ways, compared to a savings account, as your money isn’t intended to stay there for long. As such, a checking account has a functional, day-to-day purpose, whereas a savings account is intended to help your money grow.

At some point, everyone will likely need to open a checking account, so it’s important that you know how to properly use one. This guide will provide you with easy-to-follow rules that you should keep in mind when opening and managing your checking account.

What to Know Before Opening a Checking Account

Most banks offer a variety of checking account options, so it’s worth having a clear understanding of exactly what you intend to get out of your account. Some things to consider when choosing a checking account include:

  • Is there any minimum balance required to open an account?

  • Are there any limitations on checks or debit transactions?

  • Do you want a checking account with or without overdraft protection?

  • How much does it cost to use this account on a monthly, yearly, or per transaction basis?

  • How much money is needed to open a checking account that pays interest?

Once you’ve opened a checking account, there are a few simple rules that you should follow to ensure your spending does not exceed your means.

Take Charge of Your Records

Because it is a transactional account, funds can flow in and out quickly. It can sometimes be hard to keep track of them all, and if you don’t know what’s going in and out of your account, it will be difficult to manage it. While it might seem tedious, recording each transaction made will not only allow you to manage your account properly, but also instill good financial discipline.

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Balance Your Account Regularly

Balancing your account helps you stick to your budget and helps you avoid unnecessary charges resulting from bounced checks or overdraft fees. You can do this by manually comparing your monthly statements with your own records to make sure they balance. This also helps you spot any errors in the system, such as incorrectly charged fees.

Keep Your Account Information Protected

Unfortunately, financial fraud remains a reality in our world. Don’t take the safety of your account information, especially your PIN numbers and online banking passwords, lightly. In particular, be cautious about official-sounding requests for such information. These are often phishing scams as a legitimate financial institution will never ask you for such sensitive information in this way.

Simple actions to help you protect your money include checking your account regularly for fraudulent or erroneous charges, never sharing your banking information with anyone, and never accessing your financial accounts using public wifi that isn’t password protected. Additionally, if your debit card is stolen, report it immediately. If someone uses your card without permission and you don’t report it within 60 days after you receive your statement, you are not protected from damages. However, if you report the card as lost or stolen within two business days, you won’t be responsible for more than $50 of unauthorized transactions. So it pays to be vigilant.

Give Yourself a Cash Cushion

While we understand that this is not always possible, it is good practice to always give yourself some breathing room in your account. Emergencies always happen without warning, so it’s always a good idea to ensure you have a readily accessible cash on hand. This is not only good practice for managing your checking account, but for your overall finances as well. One useful tip is to set up online alerts when your account balance falls below a certain level.

Understand the Effect of Funds Availability

Under federal regulations, financial institutions are obligated to disclose their funds availability policy to their customers. The funds availability policy refers to how long it takes after you make a deposit for your funds to be available in your account. In general, electronic deposits, cash deposits, and certain types of checks (such as cashier’s checks or U.S. Treasury checks) are available within one business day. However, other types of checks may take a few business days to process, depending on your bank or credit union.

A common mistake that people make is not factoring in funds availability when managing their accounts. This is a mistake that can lead to overdrawing your account and overdraft fees. It’s also why keeping a cash cushion in your checking account is so important.

Here at Citadel, we offer three different types of checking accounts, including a free checking account. Each gives you access to a variety of online and mobile banking tools, so be sure to contact our team today to discuss which option is best suited to your needs.

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