CHECKING ACCOUNT FUNDAMENTALS

Have you ever really had a lesson in how to manage a checking account? Most people have not - which has led to serious problems for many consumers. Because a checking account is such a valuable financial management tool, it is vital that you know how to use one correctly. This program will teach you the fundamentals of checking accounts - so you can avoid future problems and establish a positive, long-term relationship with your financial institution.

A checking account is a contractual relationship between you and your financial institution. Each party has specific obligations.

• The financial institution is responsible for safely holding your money and helping to facilitate your purchases
• You are responsible for handling your account wisely

The most basic and important aspect of checking account management is to ensure there is enough money in your account to cover any checks you write.

The potential consequences of not managing your account properly are severe. If you write a check for more than is in your account, the check will be rejected when it comes in for payment. It will be sent back to the person who deposited it and, without notice, your financial institution will charge you a non-sufficient funds fee (NSF) for "bouncing" it. The merchant you wrote it to will also charge you a returned check fee. The law also enables the merchant to charge you for up to three times the amount of the check. In addition, you may be subject to court proceedings that can result in fines and being required to take special money management classes.

Tools for wise checking account management

• Balance your checkbook on a monthly basis.
• Review your checking account statement every month.
• Get the most current information about your account by using the telephone, Internet, or ATM. Typically, this information is updated each business day. However, be aware that you may be charged a fee for this service.
• Ask your financial institution about their fees so that you are not surprised when you get your statements. Also, find out how your financial institution processes checks. Some process the largest checks first. If your first check bounces, all checks processed that day will bounce as well, each with its own charge.
• Use overdraft protection. Overdraft protection acts as insurance if there is not enough money in your checking account to cover your check. Try not to rely on overdraft protection though, as good checking account management means insuring funds are available in your checking account. Most financial institutions offer a few options for overdraft protection.
  
  
  • Checking linked to savings account
    Funds are transferred from your savings account into your checking account to cover the amount of the overdraft. While there may be a transfer fee, there is usually not an annual fee charged for the service. The transfer can be for as little as the amount of the overdraft. Since you are using your own money, you aren't charged interest. Of course, you need to be sure to have a cushion of funds in the savings account to cover the transfer.
    
    
  • Line of credit
    You establish a line of credit with the financial institution. If you overdraw your checking account, money is transferred from your line of credit into your checking account. However, money is generally transferred in amounts larger than your overdraft. For example, if you overdraw your checking account by $19.00, the institution might transfer $100.00 into the account. You will pay interest on the amount that was transferred.
    
    
  • Credit card charge
    As with the line of credit, you can arrange with your financial institution to charge your credit card to cover your overdrafts. Again, this may result in more money transferred into your account than would be necessary to cover the overdraft.
    
    
• Use direct deposit whenever possible. You can avoid mail delays or lost and stolen checks by having your paycheck or federal payments deposited electronically. Another advantage of using direct deposit instead of paper checks is the decreased opportunity for someone to steal your identity, an increasingly common crime.
• Use cash whenever possible. The fewer the transactions, the easier it is to balance your account. Use cash each week for gas, lunch and other daily expenses. Take out only the cash you need - carrying too much cash can lead to overspending and if it is lost or stolen, you have no protection against the loss.

"Always and Nevers"

There are many misconceptions about checking accounts, and it's not uncommon for people to unintentionally mishandle their accounts. You can save yourself a lot of trouble (and money!) by following the tips listed below:

Always

• Always discontinue automatic payments before closing your account. If you don't, you could face steep fees, even after the account is closed.
• Always find out how long it will take for your financial institution to process changes to automatic payments. It can take up to two weeks in some cases, and in that time payments can continue to be deducted - potentially overdrawing your account.
• Always remember that you, not your financial institution, are responsible for monitoring account activity.
• Always notify your financial institution if you change your name and address. The financial institution needs current contact information in order to send you account statements and other essential information without delay.

Never

• Never close your checking account by letting it go to a zero balance. If you don't actually close it, fees may continue even with no funds in the account.
• Never give your personal identification number (PIN) to someone else.
• Never write a blank check. Anyone can endorse it and make the check out for more money than you had planned.
• Never use other people's checks, or have others use yours. You lose control over your account and checking account management becomes extremely complicated.
• Never write a post-dated check. It can be cashed before the intended date, and if you don't have enough money in your account to cover the check, you will overdraw your account.

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CHEXSYSTEMS AND CREDIT BUREAUS

ChexSystems

Though checking account problems may stem from a variety of different issues, the result is often the same - overdrawing the account, followed by checking privilege suspension and the activity being reported to an information network such as ChexSystems. Such a system provides data to financial institutions so they may identify applicants who have a history of account mishandling. If you are on the network, you will find it difficult to open future accounts. Follow the steps below to resolve past mistakes:

Obtain your report

You may be entitled to a free report if you:

• Receive public assistance
• Are unemployed and plan to seek employment within 60 days
• Believe your consumer file contains inaccuracies resulting from fraud

You may order your ChexSystems report through any of the methods listed below. Usually, your report will be mailed in approximately 5 business days. The price per copy is $8.00 in most states. Several states have unique regulations or require different fees. Refer to the chart below for your state of residence:

Resolve the debt

If your report contains a record of an outstanding debt and you have received collection notices from ChexSystems Collection Agency, you may send your payment directly to ChexSystems Collection Agency at the address provided in the collection notice. In other cases, you pay the bank or credit union directly. Keep in mind that even if you pay the amount owed, the debt's history may still show up on the report.

Dispute erroneous information

ChexSystems Consumer Relations department will assist you if you believe your file contains errors. Have a copy of your consumer report on hand when disputing information. Representatives investigate every claim, and will notify you of the results within approximately 30 days. If errors are discovered, they will be rectified immediately.

Submit your dispute in writing to:

Mail: ChexSystems
Attn. Consumer Relations
12005 Ford Road Suite 600
Dallas, TX 75234
Fax: 602-659-2197

If the reinvestigation does not resolve your dispute, you are entitled to request a brief statement be added to your consumer file outlining the nature of your dispute:

• Send the statement in writing
• Clearly indicate that you want the statement to be added to your file
• Make sure you sign the request
• If you would like assistance writing a clear summary of your dispute statement, contact ChexSystems

Credit Bureaus

In addition to acquiring a ChexSystems report, it is advisable to check information that is contained in your other credit files. Credit bureaus acquire and maintain files on almost every US adult. The three major bureaus in the United States are Experian (formerly TRW), TransUnion, and Equifax.

These companies acquire the bulk of their data from creditors - banks, credit unions, mortgage lenders and retail establishments. The organizations typically report account activity monthly to the bureaus to be compiled with other creditors' information. The credit bureaus also acquire information by searching court records for lawsuits, judgments, and bankruptcy filings and by reviewing county records for tax, judgment, mechanic's, or other liens (legal claims).

This information is compiled along with personal information and provided to creditors, insurance companies, employers, landlords, or anyone else who has a legitimate business use for the information, at their request.

Improving Your Credit Report

While it is not possible to remove accurate negative information before the time it drops off the report, it is possible to improve your credit report through responsible credit use and good payment history.

• Develop a plan to repay your debts and effectively manage your money.
• Pay outstanding balances
• Apply for secured credit
• Ask a family member or a friend to co-sign (Make sure you repay that co-signed debt on time because any late payments will reflect poorly on your credit report as well as your co-signer's.)

Correcting Inaccurate Information

It is important to request that incorrect or outdated information be removed. If there is inaccurate information on your report, you can take steps to correct it:

STEP 1
Send a letter to the credit bureau that reported the incorrect information. The letter should explain which information is incorrect, and what the correct information is. Enclose any documents that may support your claim. The credit bureau must investigate, usually within 30 days.

STEP 2
The credit bureau must give you a written report of the investigation, and a copy of your report if the investigation results in any change. If the investigation does not resolve the dispute, you may add a brief statement to your file. The credit bureau will include a summary of your statement in future reports. If an item is deleted or a dispute statement is filed, you may ask that anyone who has recently received your report be notified of the change.

STEP 3
If the credit bureau investigation results in no change to your report and you believe the information is still inaccurate, contact the creditor directly and request documentation of the debt. If you dispute an item with a creditor, they may not then report the information without including a notice of your dispute. In addition, once you have notified the creditor of the error in writing, they may not continue to report the information if it is, in fact, an error.

Remember to document everything as you file your dispute. Keep copies of letters, mark your calendar, and get the names of everyone you talk to. Also, send the letters certified mail, return receipt requested, so you can be sure it was received. Fortunately, even if you are unsuccessful in your dispute, you have the right to add a 100-word statement to your credit report explaining a particular entry. Be concise! The statement can be edited by the credit bureau if it is too verbose. Also, be aware that the length of time statements stay on your report varies between the bureaus, but can be as long as seven years. If you want to remove your statement before it automatically drops off, send a written request.

Obtain a Copy of Your Report

It is a good idea to review your own credit report from time to time. This is particularly important before seeking a rental, making a career change, or applying for credit for a large purchase, such as a house or car. Not all creditors report to all three credit bureaus, although the information in all reports should be similar. If there is a problem with one report, it might be in your best interest to acquire the other two as well.

Experian Consumer Assistance
PO Box 2104 Allen, TX 75013-2104
www.experian.com

TransUnion Consumer Relations
PO Box 390Springfield, PA 19064-0390
www.transunion.com

Equifax Consumer Relations
PO Box 105783Atlanta, GA 30348
www.equifax.com

Review Questions How do you resolve an outstanding debt that has been reported to Chexsystems? Answer What are steps you can take to improve your credit report? Answer

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SMART MONEY MANAGEMENT

Juggling income and bill payment is a dangerous but easy trap to fall into. You can avoid overdrawing on your account by applying the following techniques:

• Never write a check before you make a deposit and count on the "float" time. With the electronic nature of banking, a check can clear the financial institution the same day you write it.
• Know how much your monthly net income is, and when you get paid
• Develop an accurate spending plan, including monthly, periodic, and annual expenses
• If you have debt, obtain a monthly total and plan for repayment
• Regularly reassess your financial situation, particularly during periods of change (income reduction/increase, unforeseen expenses, change in marital status, birth of children, retirement, going back to school, etc.)
• Get professional help. Your financial institution will provide you with access to personal financial education professionals who can assist you in organizing your money and helping you plan for all your financial needs and goals.

Create a Spending and Savings Plan

Creating a spending and savings plan that works for you will also help with checking account maintenance. You will be more organized and aware of where your money is going each month, ensuring you have what you need to cover your checks.

Income The first step in examining your spending plan is to look at your income. How do your gross and net income compare? Are your tax withholdings appropriate for you? If you get a large tax refund or owe taxes each year, you may want to make some withholding adjustments. Use the form below to write down how much you make. Be realistic when it comes to any non-guaranteed income such as overtime and bonuses. Also, if your income fluctuates, use a conservative figure to make sure you don't overestimate.

Click to download income form

Expenses It can be challenging to analyze your expenses. Just hearing the word "budget" is enough to turn most people off. However, if you think of it as establishing a plan for spending and a tool for reaching your financial goals, it becomes a much more pleasant concept.

Click to download weekly budget form
Click to download monthly budget form

Debt Debt repayment is frequently the biggest challenge we have when it comes to reaching our financial goals. After all, how do you save money for your dream vacation or new house when you have credit cards bills, possibly with very high interest, to pay? Use the form below to list your creditors and add your balances. By knowing what you owe, you'll be better prepared to commit the funds necessary to tackle that obstacle.

Click to download creditor form

The Bottom Line

Add your expenses, the amount you need to save to reach your goals and the payments to your creditors and subtract this from your income. If the numbers balance, congratulations-you're on the right track. If not, you will need to take action, whether that means increasing income, decreasing expenses, adjusting your goals, or a combination of these activities.

Click to download bottom line form

Save Money Effectively

Another aspect of sound financial management is saving money for life's expenses and goals - and help you avoid the "need" or temptation to write a check for more money that is in your account. Though there never seems to be a convenient time to start saving, remember that even the smallest investment in your future, made on a continuous basis, can result in a small fortune saved over time. Pay yourself first. In other words, make savings your top priority.

• Use an automatic savings plan. Talk to your employer about having a set amount deducted from your paycheck and deposited into an account before you even see it. If your employer cannot take the money directly out of your paycheck, your credit union can move some money from your checking account to a savings account on a designated day each month.
• Try to save 10% of your income. By weighing the instant gratification you feel by making some of your current financial choices against the ultimate gratification of reaching your goals, you may find that you can save much more than you ever thought you could.
• Establish a three-tiered savings plan. It will allow you to protect yourself against the inevitable financial surprises that come your way while working toward your future financial dreams. These three tiers include emergency savings in a liquid account, mid-range savings in a semi-liquid account and long term savings in an investment vehicle.

Delete Your Debt

If debt is the issue that's throwing your budget out of whack, discipline and commitment are the keys to success. First, make a pact with yourself to live a cash-only lifestyle. Before you can reduce your balances, you need to stop increasing them. Close the accounts if you don't feel you can control yourself. If you keep an emergency credit card, don't carry it with you. Keep it in a secure place in your home.

• Increase your payments to dramatically reduce the length of time, and thus the cost, of paying your creditors.
• Reduce interest rates to save you repayment time and money. If your credit rating is good, requesting better rates from your lenders may work. Transferring balances to lower rate accounts is also effective.
• If you have equity in your home, consider converting high-interest credit card debt to low-interest secured debt - and it is often tax deductible. (Be sure you can handle the payments involved in this option as defaulting on a loan secured by your home can have dire consequences.)
• Commit the bulk of your available debt repayment funds to the account that is most expensive and pay the minimum payments on other accounts. As the more expensive accounts pay off, commit the funds to the next most expensive one.

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PREVENT CHECKS FROM BEING LOST OR STOLEN

There is no current federal law to limit your losses if someone steals your checks and forges your signature, though state law does offer some protection. In most states, the financial institution is responsible for losses from a forged check. However, you are expected to be aware of your account activity, and you may be held responsible for the forgery if you fail to notify the bank in a timely manner that a check was lost or stolen.

Some signs that your checks have been used without your permission are:

• Checks are missing from your checkbook or your reserve supply of checks
• Mail containing checks or account information is "lost" or appears to have been tampered with
• Unauthorized transactions appear on your bank statement

Only carry checks and cards that you need and keep all others in a secure place. Write checks with thick, dark ink. Draw lines to fill in gaps in the spaces where you designate a payee and amount of check. Immediately report irregularities in your checking account statements. Report mail theft or tampering to the U.S. Postal Inspection Service.

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MAKE THE TIME FOR CHECKING ACCOUNT MANAGEMENT

Because of the potential harm that can occur when you do not balance your checkbook, it is critical that you make the time to manage your financial affairs. Some tips for making this easier are:

• It only takes a second to mark your transactions in your checkbook register. Do it immediately and every time.
• Keep all ATM receipts in a safe and accessible place and reconcile your checkbook immediately.
• Open and review your checking account statements as they come in. Waiting until later may result in errors going unchecked or statements being lost.
• Consider online checking account management. It can be a real time saver.
• Set aside a specific place in your home for your bills and financial documents. Organize them into logical files for quick and easy access.
• Try the "agenda method" - For each month on your calendar, mark a date and time for checkbook management, just as you would any important appointment. Seeing it in black and white will help you remember and make it a priority.

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USE ATM/DEBIT CARDS WISELY

Never has using the money in your checking or savings account been more convenient - and more rife with potential problems. That is why it is imperative that you know the difference between ATM/Debit card types, and how to use them wisely.

ATM Cards

Financial institutions offer ATM cards to provide their customers and members with account management flexibility. An ATM card enables you to withdraw cash, make deposits, transfer money between accounts (from your checking account and into your savings account, for example), obtain your balance, get a cash advance, and make loan payments at a day and time that is convenient to you.

Debit Cards

A debit card provides the combined benefits of an ATM card and a paper check. You may be able to use it at places other then your financial institution, such as a store or restaurant. Anytime you use a debit card, the money is automatically deducted from your checking account. Even thought it looks like a credit card, it is not the same, and will not provide you with the ability to postpone payment on a purchase.

There are two types of debit cards:

Direct debit cards: Direct debit cards will have the name or logo of the issuing financial instruction on it, but not the Visa® or MasterCard® logo. To use your direct debit card:

• Select "debit" at the merchant's terminal.
• Swipe your card through.
• Enter your PIN number.
• The system checks your account to see if there is enough money to pay for your purchase. Once approved, the money is immediately taken from your bank account and added to the merchant's account.
  
  Note: With a direct debit card, your cash withdrawal or purchase amount is limited to how much money is currently in your account. Your transaction will be denied if you exceed that figure. There will likely be a daily limit on use allowed.

Deferred debit cards: A deferred debit card looks similar to a credit card. It has a Visa® or MasterCard® logo on it. If it has a Visa logo then you can use it wherever Visa can be used. If it has a MasterCard logo then you can use it wherever MasterCard can be used. Do not be confused by the word "deferred" - the money is still taken out of your account immediately. To use your deferred debit card, you can follow the above steps, or:

• Select "credit" at the merchant's terminal.
• Swipe your card through.
• The merchant will give you a receipt to sign.
• You will not have to enter your PIN
  
  Note: With a deferred debit card, some financial institutions will allow you to exceed your checking account balance if you have overdraft protection in place, but you will most likely be charged an overdraft fee. As with direct debit cards, there will likely be a daily maximum for use.

For some debit card transactions, processing may take a day or two. It is important to record the transaction in your check register immediately and assume those funds are no longer available to ensure you don't inadvertantly withdraw money meant to be used for a debit transaction.

Fees

You may be charged a separate annual fee for ATM/Debit cards. So you know upfront, ask your financial institution what type of fees they charge. When using a different ATM then your financial institution's, you will most often be charged for the convenience. A better option can sometimes be supermarkets and drugstores, as they often offer a fee-free cash back option if you make a purchase.

What to do if your ATM/Debit card is lost or stolen

Immediately report ATM/debit card loss or theft to your financial institution. According to federal law - the Electronic Fund Transfer Act - you cannot be held responsible for unauthorized transactions if you report it missing before it's used without your permission. If unauthorized use occurs before you report it, your liability limit depends on when you report the loss:

• $50 if reported within two business days
• $500 if you do not report the loss within two business days
• Unlimited liability if you do not report unauthorized transfers within 60 days after your bank statement containing unauthorized use is mailed to you

For unauthorized charges using just your debit card number (not the loss/theft of the card), you are liable for the charges that occur 60 days after your bank statement containing the unauthorized use is sent to you.

To prevent fraud

The Federal Trade Commission offers some useful tips to help you protect yourself from fraud:

• Never disclose your account number over the phone unless you know you're dealing with a reputable company.
• Never put your account number on the outside of an envelope or on a postcard.
• Draw a line through blank spaces on charge or debit slips above the total so the amount cannot be changed.
• Don't sign a blank charge or debit slip.
• Tear up carbons and save your receipts to check against your monthly statements.
• Cut up old cards - cutting through the account number - before disposing of them.
• Open monthly statements promptly and compare them with your receipts. Report mistakes or discrepancies as soon as possible.
• Keep a record - in a safe place separate from your cards - of your account numbers, expiration dates, and the telephone numbers of each card issuer so you can report a loss quickly.
• Carry only those cards that you anticipate you'll need.
• Never carry your PIN or write it on your ATM or debit card.
• Never write your PIN on the outside of a deposit slip, an envelope, or other papers that could be easily lost or seen.
• Carefully check ATM or debit card transactions before you enter the PIN or before you sign the receipt.

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KNOW THE DIFFERENCE BETWEEN CHECK TYPES

There are several different types of checks available for personal use. Once you have a checking account, you will likely use personal checks for most of your transactions. However, you may be asked to use one of the other types of checks if your merchant or service provider requires a guarantee that the funds will be available when the check is cashed.

Personal
These are the types of checks you receive when you open a checking account with a financial institution. You may be charged an annual fee for the use of the checking account, as well as the cost of checks.

Certified
A certified check is a personal check for which the financial institution guarantees payment. To do so, the financial institution will freeze the value of the check from the funds available in the checking account.

Cashier's
Cashier's checks are available at most financial institutions, usually for a low fee. You can purchase one for any dollar amount and the funds are guaranteed. People often use a Cashier's Check for large amounts such as for a mortgage closing or automobile purchase.

Money Orders
Money orders are a type of check that can be purchased at a variety of retailers, including the post office, financial institutions, and check-cashing establishments. The fees for money orders vary, but are typically low-cost.

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KNOW HOW TO ENDORSE A CHECK

Checks must be endorsed (signed) before you or someone else can cash or deposit them into an account. Endorsing a check means making a specific notation on the back of the check so the financial institution will know what to do with it. There are three ways to endorse a check:

Blank Endorsement - if you want a check cashed or deposited into your account. It includes your signature and account number:

Special Endorsement - so a third party may cash the check. It will include a specific notation as to who may cash the check, as well as your signature and account number:

Restrictive Endorsement - specifies that the check be deposited only into your account and not made out to cash. It should include what you want done with the check, and your signature and account number:

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HOW TO DEPOSIT A CHECK WITH A DEPOSIT TICKET

Some financial institutions require a deposit ticket be included with a deposit. If so, you will need to complete the following information:

1. Date of deposit
2. Amount of currency, if you are depositing cash
3. Amount of coins, if you are depositing coins
4. Amount of the check, if depositing a check
5. The total from the other side of the deposit ticket, if information was completed on back of the deposit ticket- this is usually the total of checks deposited if the number exceeds the room available on the front
6. The total amount of the deposit
7. Less cash received
8. Net (total) deposit

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HOW TO WRITE A CHECK

You can avoid many problems - such as having a check be returned to you and payments being made late - by properly writing the check in the first place. You must include the following information:

1. The date that you wrote the check (never postdate a check)
2. The payee (person or entity for whom the check is written)
3. The amount of the check in numerals
4. The amount of the check in words
5. Your signature
6. A memo so there is a record of what the check was for
7. If you make an error, write "VOID" on a check or fix the error and write your initials next to the change. Be sure to indicate a voided check in your check register.

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KNOW HOW AND WHEN TO MAKE A STOP-PAYMENT ORDER ON A CHECK

There may be a time when making a stop-payment order on a check (commonly called "canceling a check") may be a necessary and prudent action. Though not free, the cost is inexpensive compared to the price and aggravation of a check returned for insufficient funds. A stop-payment order renders a check "uncashable" to the payee. To make such an order, you must:

• Have legitimate grounds for the order - if you if you write a check and then stop payment without good reason, you may create civil or even criminal liability for yourself
• Provide the details of the check: check number, date and amount of the item, and the payee
• Sign a form that documents your request

The fee to cover the paperwork involved in this request will be automatically deducted from your checking account. Most financial institutions impose a six-month time limit on stop-payment orders. If you think someone could cash the check after that time expires, you would need to renew the stop-payment order - and pay another fee.

Placing a stop-payment order on a check may be done for a variety of reasons, including:

• Your mailed check never arrived to its desired destination
• You suspect checks have been stolen
• You wrote a check for a service, but have a legitimate complaint against the service
• You wrote a check for a product, but have a legitimate complaint about the product

The financial institution must receive the stop-payment order in time to give them a reasonable opportunity to act on it before the cut off time. The stop-payment cut off time is usually one hour after the opening of the next banking day after the banking day on which they receive the item.

If more then one person is authorized to write checks from your account, you do not need each party's permission to place a stop-payment order - it need only come from one of the authorized individuals.

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CHOOSE THE RIGHT ACCOUNT FOR YOU

If you share an account, select one person as the account manager. With more than one account user, monitoring transactions can be extremely complex. Think carefully before agreeing to have a joint account or becoming a co-signer on someone else's account - if they mishandle the account, you could be held responsible for the errors.

Consider all of your account options before deciding which is best for you.

Individual
An account owned by one person. This is a good option for those who want to have total control over the account.

Joint
An account owned by two or more people. Since it is usually shared for household expenses, a joint account is often appropriate for married couples. Each co-owner has equal access to the account. Most types of accounts, whether basic checking, savings or money market, allow for joint use.

Senior/student checking
Many financial institutions offer special checking deals if you are a student or age 55 or over. The benefits vary, but may include freebies on checks, cashiers and traveler's checks, ATM use, better rates on loans and credit cards, or discounts on everything from travel to prescriptions.

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HOW TO READ YOUR CHECKING ACCOUNT STATEMENT

It is vital that you review your checking account statement thoroughly. The information that is included in this statement will help you reconcile (balance) your checkbook. Be on the alert for errors, or evidence of identity theft. Your checking account statement will contain the following data:

1. The statement period for the activity in the account
2. The account number
3. The account summary
4. A detailed list of checks that have been cashed
5. The monthly maintenance charge for account
6. A list of your withdrawals
7. Deposits and other credits
8. ATM locations used

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KNOW HOW TO KEEP TRACK OF YOUR CHECKS

It is essential that you keep track of all the deposits (credits) you make, checks you write, ATM withdrawals, and fees you are charged (debits) in a check register. Record the following information:

1. Your starting balance
2. Check number (this alerts you if a check is missing in sequence)
3. Date you wrote the check or made the deposit
4. Who you wrote the check to
5. What you wrote the check for
6. The amount of the check

If you used your ATM or check card, enter the amount as you would a check.

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HOW TO RECONCILE A CHECKBOOK

Reconciling your checkbook every month is the only way you can be certain that there are no errors in your own, or your financial institution's, accounting. Your checkbook register, not your account statement should always reflect your true balance.

1. Mark off in your checkbook register every item that appears on your statement. If there is an item on your statement that is not listed in your check register, determine if it is accurate. If the item is correct, list it in your check register. If you believe the item is incorrect and you suspect an error was made, call your financial institution immediately to have it investigated.
   
   
2. Your financial institution should provide you with a monthly reconciliation worksheet with your statement. Enter the ending balance shown on your statement.
   
   
3. List the deposits and other credits that are in your checkbook register but are not on your statement. Add these to your ending balance.
   
   
4. List the checks, ATM withdrawals, fees and other debits that are on your checkbook register but not listed on the statement. Subtract these from your balance in step 3 to get your new ending balance.
   
   
5. Write down the ending balance in your checkbook register.

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GLOSSARY

Automated Teller Machine (ATM):Computer-controlled terminals located on the premises of financial institutions or elsewhere, through which consumers may make deposits, withdrawals, or other transactions as they would through a teller. Also known as a money machine or cash machine.

Bad Check: A check that is written when there is not enough money in the account. Also known as a bounced check.

Balance: The amount of money in an account.

Cash: Money in the form of bills or coins.

Check: A document used for payment.

Check Register: A form to keep track of checking account transactions.

Checking Account: An account in which checks may be written against amounts on deposit.

Cleared Check: A check that has gone through a financial institution's processing center and is listed on a monthly statement.

Credit Unions: Financial cooperative organizations of individuals with a common affiliation (such as employment, labor union membership, or place of residence). Credit unions accept deposits of members, pay interest (dividends) on them out of earnings, and provide consumer installment credit to members.

Debit Card: A card used to make an electronic withdrawal from funds on deposit in a financial institution, as in purchasing goods or obtaining cash.

Deposit: The money that is put into an account.

Deposit Ticket: The form used to put money into an account.

Endorse: To sign a name on the back of a check in order to cash it or deposit it.

Financial Institution: A business that deals with money. For example, a bank or credit union.

Insufficient Funds: See Bad Check.

Insufficient Funds Fee: The fee that is charged by a financial institution or business when a check does not clear.

Less Cash Received: The amount of cash an account holder gets back when a deposit is made.

Memo: The area on a check that notes what the check was written to pay for.

NSF: Not sufficient funds - when there is not enough money in an account to cover a check.

Outstanding Check: A check that is still going through financial institution processing.

Overdraft: When an account goes below zero - there is not enough money to cover the withdrawal.

Reconcile: The process of determining that a checkbook balance matches the financial institution's balance for an account.

Reconciliation: When an account holder has verified that a checkbook balance is the same as the financial institution's balance for the account.

Reconciliation Form: A form that helps an account holder reconcile an account. See Reconcile.

Recording a Transaction: The act of writing down a transaction in a check register. See Transaction.

Statement: The papers that are sent every month from a financial institution listing all of the activities in an account for the month.

Transaction: When money goes into, or out of, an account. Can include deposits, withdrawals, payments, fees, ATM transactions or transfers.

Void: Rendering a check unusable; an indication that the check is unusable

Withdrawal: The removal of money from an account. This can be by check, ATM, automatic payment or other methods.

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