The Importance of Successful Checking Account Management

Knowing how to successfully manage your checking account is important. Successful checking account management will give you better control over your day-to-day finances and can lead to your having more control over the rest of your personal finances.

The key to successful checking account management is organization.

With a balanced checking account, you'll be less susceptible to NSF (non-sufficient funds) occurrences because you will have a clear indication of what your balance is at all times. If you've ever had a check returned NSF, you know how expensive, inconvenient and embarrassing it can be. Furthermore, excessive NSF occurrences can lead to loss of checking account privileges.

To successfully balance your checking account you should be familiar with the three elements involved in checking account balancing: the checkbook register, the checking account statement and the duplicate check. When used correctly, each of these elements work together to give you a fast and accurate method of checking account balancing.

The Checkbook Register
The checkbook register is the place where you record all of the debit and credit transactions that affect your account. A debit is any transaction that subtracts (-) funds from your account and a credit is any transaction that adds (+) funds to your account. Below is a sample page from a checkbook register:

The Checking Account Statement
The purpose of your checking account statement is two-fold. First, it provides you with your credit union's official record of your checking account activity, and second, it aids in checking account balancing. The special work sheet located on the reverse side of most credit union statements is specifically meant for this purpose.

Your statement shows all the debits (check clearings, ATM withdrawals, ACH payments, etc.) and credits (deposits, ATM deposits, interest dividends, etc.) that occur during the statement period.

The Duplicate Check
The duplicate check is the carbonless form located directly under each check you write. All the information written on a check is copied instantly onto the duplicate check. The duplicate check conveniently provides you with a quick record of all the checks you write. This is important in those times when you're in a hurry.

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Share Draft Checking Account Basics

Before you can cash or deposit any share draft/check, you have to endorse it. That means you must sign or stamp the back of it. Most share drafts/checks have a line for a signature or stamp. Otherwise, endorsements should be made within 1 and 1/2" from the left edge on the back of the share draft/check.

Tips on endorsing share drafts/checks.

• When you endorse a share draft/check, sign your name exactly as it appears on the front.
• If your name is spelled wrong on the front of the share draft/check, endorse it on the back the same way it appears on the front. Below that, sign your name correctly.
• If you give someone a share draft/check made out to you, be sure to write on the back "pay to the order of" and the person's name. Sign your name below that.
• REMEMBER: YOU ARE RESPONSIBLE FOR PAYMENT ON ANY SHARE DRAFT/CHECK YOU ENDORSE.

Types of endorsements:

1. Blank Endorsement is the signature of the person to whom the share draft/check is written. Anyone can then cash it. (To be safe, endorse you share drafts/checks only when you're ready to cash them.)
2. Restrictive Endorsement states that the share draft/check is only to be deposited. You write "For Deposit Only" and sign your name under it. This is the endorsement to use when mailing a deposit to the credit union.
3. Special Endorsement makes a share draft/check payable to a third party and prevents anyone else from cashing it.

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Making Deposits

Before you can write share drafts/checks, you need to put money in your account. You do this by filling out a deposit slip and giving it to the credit union. Some credit unions require deposit slips only for drive-through and ATM deposits; others may not use deposit slips at all. If your credit union requires deposit slips, they usually come as part of your checkbook. If you need more, the credit union has them available. You will usually receive a receipt for your deposit.

This is just a sample deposit slip. Not all deposit slips are the same

1. Write in the correct date.
2. List currency (paper money) and coin deposits separately.
3. List each share draft/check separately and endorse each check proporly. (There is room on the back of the slip to list additional share drafts/checks.)
4. Add up the amount of each share draft/check, the currency, and coins. Enter the sub-total.
5. If you want cash back, enter the amount on the deposit slip, then subtract it from the sub-total and enter the remaining balance as your total deposit amount.
6. If you get cash back, you must also sign the deposit slip.

REMEMBER: When filling out your deposit slip, write clearly. Be careful when adding and subtracting. Deposit slip errors can be troublesome to your credit union and to you.

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Writing Share Drafts/Checks

Helpful hints for writing share drafts/checks:

• Write in ink so nothing you wrote can be changed.
• Write clearly.
• Fill in the blank lines with proper information.
• Remember that when you pay in person with a share draft/check, you usually must show identification. This can be a debit card, a driver's license, or perhaps a credit card. Different stores ask for different identification.
• Never sign a share draft/check until all other information on it has been completed.

This is a sample share draft/check and how it should be properly filled out.

1. Enter the date.
2. Enter the name of the person or company you are paying.
3. Enter, in figures, the amount of the share draft/check.
4. Write out the amount in words, starting as far to the left as possible. Write in amounts of dollars and fractions of dollars. For example: $10.00 is written "Ten and 00/100"; $251.41 is written "Two hundred fifty-one and 41/100."
5. Write in what the share draft/check is for.
6. Fill in any remaining space with a line to the right of the amount. This will prevent anyone from increasing it.
7. Sign your name.

What if you make a mistake?

1. Write VOID in big letters across the share draft/check.
2. Write VOID for the share draft/check number in your register (or on your stub).
3. Rip up the share draft/check and write a new one.

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Balancing Your Checking Account

Before you begin to balance your checking account, make sure you gather together your checkbook register, your checking account statement, your duplicate checks, your previous month's statement and any deposit or withdrawal receipts you've collected during the statement period.

1. Using your previous month's statement, verify that all checks shown as outstanding did actually clear on your current statement. If not, record them as outstanding again.
2. Then, verify that all outstanding deposits not shown on your previous month's statement were credited to your current statement.
3. Using your current statement as a guide, compare it with your register to identify any debits or credits to your account that have not been recorded in your register. An easy way to do this is to place a checkmark in the appropriate column of your checkbook register after you verify that a debit or credit has cleared your account.
4. Any blank spaces left in the column should alert you of outstanding debits and credits. You will need to know these amounts when you balance your checking account.
5. Now, using the reverse side of your credit union statement, record the statement balance as it appears on your statement.
6. List all outstanding deposits (those that have not yet been credited to your statement).
7. Add outstanding deposits to the statement balance to arrive at a subtotal.
8. Subtract total of outstanding checks (those you have written that have not yet been debited from your account).
9. The resulting figure is your ending balance. This balance should agree with the ending balance in your register.

Troubleshooting

If the ending statement balance and the ending register balance do not agree, then your checking account is not in balance. This means that an error was made somewhere along the line. If this is the case, you should check for the following:

• Did you account for all ATM transactions, check clearings, ACH transactions, automatic withdrawals/deposits, interest earnings, services charges, etc.?
• Double check your addition and subtraction, both on the statement work sheet and in your checkbook register.
• Compare the check dollar amounts shown on your statement with the dollar amounts recorded on your duplicate checks and in your checkbook register.
• Compare deposits shown on your statement with deposits recorded in your checkbook register and on your deposit receipts.

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