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.
About the author:
Jakob Jelling is the founder of
http://www.cashbazar.com. Visit
his website for the latest on personal finance, debt
elimination, budgeting, credit cards and real estate.
