Common Mistake: Keeping Large Amounts of Money in your Checking Account

You won’t be living large on your checking account interest. Many checking accounts pay little or no interest. That’s why it usually doesn’t make sense to keep a large amount of money in your checking account. It’s money you could be investing to make a higher rate of return.

Common Mistake: Not Waiting for Checks to Clear

One of the biggest mistakes you can make with a checking account is thinking that you have access to deposits immediately. If you deposit a check, especially one drawn on an out-of-town bank, it may be several days until your funds are available. You must wait for the deposited check to clear, which means that you don’t get access to your money until the bank gets its money. Also, sometimes your bank may put a “hold” on a deposited check. Until the hold is removed, you can’t write checks on the deposited amount.

Common Mistake: Relying on Overdraft Protection

Overdraft protection may sound like a great feature but it’s dangerous. Although you’re protected if you bounce a check, the financial institution charges you interest on the money it shells out on your behalf. Overdraft protection encourages you to overspend. You are far better off staying on top of your finances by balancing your checkbook.

Tip: Understand the Fees and Charges for Your Account

If you read the small print on the paperwork that comes with your checking account statement, you’ll see that fees and service charges can make a big dent in your balance. Here are a few common ones:

• ATM transaction fees
• Charges to order more checks
• Bounced check fees
• Stop payment orders
• Maintenance fees for falling below the minimum balance requirement

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