Checking Account Tingz

Rep: Thank you for calling ABC Bank, this is Shaniece Speaking, how may I help you?

Customer: UGH! I am so upset! I keep trying to use my debit card and it is constantly getting declined. Why is that?

Rep: Okay ma'am, I'd be more than happy to assist you! Bear with me one moment as I look through your account... It looks like your card is being declined because there are currently no funds in your checking account. Actually, it looks like you've never made a deposit since you've opened the account two weeks ago.

Customer: Okay, and what's that supposed to mean? I thought that I could swipe my card and all of my transactions would just go through.

Rep: No ma'am. You must make a deposit into your account first and you will need to make sure that you have the funds in your account in order to make a purchase. You can make a deposit via direct deposit from your job, depositing cash or a check, or doing a transfer from another bank via online banking. If you don't have money in your account when making a purchase, the card will get declined.

Customer: So I don't get a bill in the mail for making my purchases?

Rep: No, you may be confusing your debit card with a credit card. After making a deposit and ensuring that there are funds in your account, you can then make purchases or pay bills online, write checks, and swipe your debit card as many times as you'd like.

Customer: Thank you so much for your help, I had no idea of how to use an account like this.

Rep: Anytime! Is there anything else I can help you with?

Customer: No thank you, you've been great! Have a great day!

Definition of a checking account- "A demand deposit account subject to withdrawal of funds by check." (helpwithmybank.gov)

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Please Do Not do this people!

If you're like me, you had no clue of how to use a checking account after graduating from high school as there was no lesson plan around it. As you've read above, the most important part about using a checking account is to ensure that you have the funds in there to make the purchase or else you can incur A LOT of fees. It is also important to know that the biggest difference between a checking and savings account is that the checking offers unlimited transactions, whereas, with a savings you can only do up to 6 electronic withdrawals according to Regulation D (which I'll dive deeper into in a later post). To get a better understanding of this transactional account, it is important to follow the steps below:

1. Be sure to choose the right account

A lot of financial institutions charge a monthly maintenance fee and/or require a minimum daily/monthly balance to avoid that fee. With most places, there is usually a way to avoid those fees, including having a direct deposit or using your debit card a certain amount of times. If there is no way around the fee, be sure that you have enough money in your account to afford it. You DO NOT want to end up owing the FI (Financial Institution) a bunch of money in fees. Keep in mind that there are FI's that offer no fee checking accounts with no strings attached. These places are usually Credit Unions instead of banks.

2. Opening a Checking account

Once you have found the right account for you, it is time to open the checking account. When opening any account, you will need to bring a valid government-issued ID as well as your social security number. Always check with the institution to see if they require more at the time of account opening.

Most places require you to be at least 18 years old to open the account by yourself. If you are a minor, you may need to bring an adult that can be added as joint to the account. This is so there is a responsible adult that can help you to manage the account. Some places require a credit check to open the account to get a better understanding of your background. Some will run ChexSystems to ensure that you don't have any derogatory marks from other banks. This may include a charged off checking account or even fraud. (I will discuss Chexsystems in a later post.) If you show up in this database, you will usually need to clear up the concerns before you can open a new account.

3. Using a Checking Account

You should always keep a running tab of your transaction so that you can reconcile your account at the end of each month. It is important to balance your checking account so that you can ensure that there have been no fraudulent transactions and that deposits have been made into the right accounts. Keep in mind that all FI's have different deposit hold procedures so all of your funds may not be available to you right away. Also, all transactions may not clear your account right away depending on the method in which you've done purchases and paid bills.

4. Over-draft

Some FI's will let you link other savings accounts to your checking account to avoid fees. This way, if you swipe your card or if a check tries to clear and you do not have the funds in your account, your transaction will still go through by using the funds in your savings. Be careful as some places still charge a fee for this. There is also the option of attaching a line of credit to the checking account to avoid negative balances and returned checks. Most FI's allow you to bring your account negative up to a certain amount including fees before your transactions start getting declined. Be careful with this option as I have seen people rack up thousands of dollars in fees.

5. keep your account protected

Your bank accounts are insured with the FDIC for up to $250,000 and credit union accounts are insured for the same amount through the NCUA. If you lose your debit card, please be sure to call your bank to block it immediately and dispute any fraudulent transactions. Some FI's even offer a feature in which you can temporarily block your debit card in their app. If you lose your checks, be sure to call your FI to place a stop payment so that you can be sure that there will be no checks that clear that are not in your possession. It may even be safer to open a new checking account in some cases.

Okay everyone! Thank you so much for visiting and I hope this was helpful. If you have any questions please remember to go to the forum page. Also, feel free to email me at shanieceaxtmann@gmail.com if you have a question you don't want others to see. Go ahead and subscribe below so you never miss a post. Be sure to come back next time to discuss debit cards in depth!