Common Mistakes You’re Making With Your Checking Account


A checking account is an essential tool to keep track of your finances and pay your bills. It’s also a valuable resource for helping you budget your living expenses. Avoid these common pitfalls to get the most out of your checking account. 

Paying Monthly Service Fees 

Some financial institutions charge a monthly fee for using their checking account services. This fee is often waived if you maintain a minimum balance or meet their monthly deposit requirements. 

Although these fees typically range from $6 to $15 a month, they can cause you to unintentionally go beyond your available funds, resulting in overdraft fees and even impacting your credit score.  

Rather than being loyal to a financial institution, shop around and find a brick-and-mortar or online bank or credit union that offers free checking.  


Not Arranging Overdraft Protection

Anyone with a checking account needs overdraft protection. Whether you miscalculated your available balance, forgot about a large purchase, or your account was hacked and emptied, overdraft protection can help you avoid hefty returned check fees and an embarrassing situation when your debit card is declined at checkout.  

You can arrange for your checking account to be protected by your savings account, a line of credit, or a credit card. This means that they will automatically transfer money to cover your transactions, so they aren’t declined. 

Although you won’t have to pay an NSF (insufficient funds) fee, you may still pay an overdraft charge. In the case of a line of credit, you will pay interest on the amount you borrow until you pay it back.  

Also, ensure you have funds in your backup source; otherwise, the transactions will not clear. If you don’t have overdraft protection, the other party can demand reimbursement for a bad check fee and report you to ChexSystems.

You can also ask your bank if they can transfer funds from a linked bank account in preset increments if your balance gets below a certain amount. 


Not Monitoring Your Account Balance 

These days, almost everyone uses online banking, making it easy to monitor checking account transactions. But even if you keep a checkbook ledger and reconcile your bank statement every month, it is still essential to monitor your checking account closely.  

First and foremost, you want to ensure you have enough available funds to cover your purchases. You should also check your account when you travel or make a lot of purchases around the same time in case of identity theft. Pay attention to small charges you don’t recognize for signs that someone may be accessing your bank account. 

If you suspect that your checking account has been hacked, contact your bank and freeze your account. Then change your passwords and PINs. Contact Experian, TransUnion, or Equifax to check your credit history and file a police report. 

If you use online banking, always use strong passwords with difficult security questions and change them often. Never access your bank account in public because hackers can intercept your public connection and access your checking account.  

Also, consider signing up for text alerts to notify you whenever your debit card is used. 


Failing to Document Your Debit Card Transactions   

Debit cards have simplified purchasing goods and services, but it is easy to forget about a purchase if you don’t document it. This may result in overdrawn funds which cost you money in fees.   

Services like hotels automatically hold a small deposit of $50 to $200 a night to cover incidental charges like Wi-Fi, room service, gift shop purchases, or newspaper delivery. If you don’t use it, it will be returned a few days after check out. 

If you use your debit card at hotels and car rental companies, they can tie up money for a security deposit in your checking account for several days before issuing a refund. Use a credit card for these services to avoid this hassle so you can access your checking account funds.  


Not Using a Savings Account

A high-yielding savings account can earn you interest on your money. While some checking accounts earn low-interest rates, most don’t earn any interest. The primary purpose of a checking account is for making purchases, paying bills, and ATM withdrawals. 

A savings account is used for saving and growing your money and helps you manage your spending habits. You are less likely to spend money in your savings account than your checking, especially if you have a limited number of transactions each month. Most savings accounts are limited to six transactions monthly to ensure banks have enough cash on hand. 


Closing a Checking Account Before Checks Clear

If you recently switched banks, you may inadvertently close your current checking account before all the checks clear. If checks are presented after the account is closed, you will be charged a returned item fee. To avoid this, ensure that you record your transactions and check your account daily. 

If possible, leave the account open for 30-60 days after switching accounts to ensure you didn’t miss an electronic payment or overlook an outstanding check.  


Assuming Every Transaction is Legit

You are solely responsible for your personal finances. You should check your checking account at least once a week for canceled subscription charges that are still showing up, automatic hikes in membership fees, or fraudulent charges. 

These small charges can impact your budget if they go unnoticed. Fraudulent charges can wipe out your entire account, so the sooner you catch them and notify your bank, the sooner they can reverse them and locate the offender.


Paying ATM Fees

Most banks have an extensive network of ATMs that allow you to avoid fees. Online banks and credit unions tend to have a smaller network so offer an ATM refund instead. However, if you go over a certain amount of ATM withdrawals per month or use an out-of-network ATM, you may incur a fee for each transaction. 

There are numerous other ways to avoid these fees, which can add up over several months. Ask for cash back when you make a purchase using your debit card, but be careful since some companies charge a fee for this service. 

You can also use Venmo or Zelle to pay someone in cash if you don’t have the greenbacks on hand.    


Finance is us Keeps You Informed

At Finance is us, we want you to be informed to make the best choices with your personal finances and be fiscally healthy. Browse our site for on-trend financial advice on everything from getting a mortgage to using cryptocurrency and how to invest for retirement.    


Disclaimer: All content on this site is information of a general nature and does not address the circumstances of any particular entity or individual, nor is the information a substitute for professional financial advice and services.

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