accurately recording checking account activity

Posted : February 15, 2018
Last Updated : January 10, 2019

accurately recording checking account activity

Balancing, reconciling, and reviewing your checking account is good practice in order to better manage your money and to spot financial management mistakes and fraudulent activity. Use this overview to help you accurately record your checking account activity.

Steps to Keeping Accurate Account Records

To keep an accurate record of your checking account activity, you should:
  • Record all transactions in your check register or budgeting software.
  • Record maintenance fees, interest, and other bank charges.
  • Review monthly checking account statements.
  • Reconcile your check register with monthly checking account statements.


You should get a receipt when you use a debit card to buy goods or perform electronic banking transactions. If the merchant can’t give you a receipt, or if you forget to take your receipt, promptly record the amount so you can record and track the expense later. Remember that all purchases, even small ones, add up. You can avoid costly overdraft fees by recording transactions and monitoring your current account balance regularly.

When using an ATM, make it a practice to always get a receipt. Printed ATM receipts usually include:
  • The amount of the transaction.
  • Any extra fees charged.
  • The date of the transaction.
  • The type of transaction (e.g., deposit or withdrawal).
  • A code for your account or ATM card and the available balance.
  • The ATM location or an identification code of the terminal used.
  • The name of the bank or merchant where you made the transaction.

Record All Transactions in Your Check Register

If you don’t regularly monitor your banking transactions and account balance online, you should record all transactions (i.e., electronic banking, cash transactions, writing a check) in your check register or enter them into a budgeting software program.

If you have a joint account, or if other family members have an ATM or debit card attached to your checking account, make sure you record their transactions as well.

Record Interest and Fees

With an interest-bearing checking account, review your monthly account statement to determine how much interest you received. Record this interest as a deposit (+) in your check register or budgeting software. Your monthly account statement will also indicate if you’re charged any fees. You’d record any fees as a payment or debit (-).

Correcting Errors on Your Statement

Contact your bank as soon as you find an error on your bank statement. If you call or visit your bank, it’s a good idea to follow up by email and keep a copy for your records. The email should include:
  • Your name.
  • Your account number.
  • An explanation and dollar amount of the error.
  • The date the error occurred.
  • Any conversations (and the outcomes) with bank personnel regarding this error.

The bank must receive notice of the error no later than 60 days after the date of the statement.

Overdraft Fees

An overdraft occurs when you don’t have enough money in your account to cover a transaction. If you have an overdraft program linked to your account, your bank would cover the transaction and charge you an overdraft fee. If you don’t have an overdraft program linked to your account and you overdraw your account, the bank would decline a payment (or return a check, when applicable). For checks that are returned unpaid, both the bank and the company to be paid may charge you a non-sufficient funds (NSF) or returned item fee. Overdrawing your account can be very expensive.

Opt-In Rule for Some Debit Card Transactions

If you have a debit card, the bank will ask you how to handle certain overdrafts generated by:
  • ATM withdrawals.
  • One-time debit card transactions at store point-of-sale (POS) terminals.

If you opt in to a bank’s overdraft program, the bank can charge you a fee to process point-of-sale (POS) or ATM transactions that exceed your account balance. Then, overdrafts and the fee will be deducted immediately, in full, from your next deposit. These deductions will lower your account balance and may increase the risk of more overdrafts.

If you don’t opt in, the bank will decline your ATM withdrawals and debit card transactions at POS terminals if you don’t have enough money in your account to cover the withdrawal or purchase. You won’t be charged fees.

Remember, the opt-in rule only applies to ATM and certain debit card transactions. So, even if you don’t opt in to overdraft coverage for certain ATM/POS transactions, the bank may still charge you overdraft fees for other types of transactions, such as for checks or for bills you automatically pay through your debit card every month.

Check Overdrafts: “Bad Checks” and “Bounced Checks”

If you write a check without enough money in your account to cover the check, it’s known as writing a bad check or bouncing a check. Knowingly writing a bad check, or doing so with fraudulent intent, is a crime in every state. Each state has different civil and criminal penalties (e.g., fines and jail time).

If you repeatedly overdraw your account, your bank might close your account and report negative checking account activity to an account verification company (e.g., ChexSystems or TeleCheck). This can make it difficult to cash or write checks and to open an account in the future.

What should you do if a bank turns you away as a customer because of an unfavorable report about your bank account?
  • Ask the bank for the name, address, and phone number of the company that furnished the report.
  • Request a free copy and look for and correct any incorrect or missing information.

If you dispute the matter in writing and the check reporting company doesn’t change the record to your satisfaction, you’re entitled to add a written statement to your report. If you have a concern about a bank or a check reporting service, contact the appropriate federal regulator or, in the case of check reporting services, the Federal Trade Commission (FTC).

Avoiding Overdraft Fees

Good account management is the best way to protect your hard-earned money. The best way to avoid overdraft fees is to manage your account so you don’t overdraw it. You can do this by:
  • Keeping track of how much money you have in your checking account by keeping track of your spending.
  • Paying special attention to track your electronic transactions (ATM, debit card, and online transactions).
  • Remembering to record automatic bill payments and checks you write.
  • Reviewing your account statements each month and reconciling them with your check register.
  • Asking your bank if you can get email or text alerts when your balance is running low.
  • Keeping extra funds in your account as a cushion.

Sometimes mistakes happen. If you do overdraw your account, deposit money into the account as soon as possible to cover the overdraft amount plus any fees and charges from your bank, and to provide a cushion for future purchases or withdrawals. This will help you avoid additional fees.

Bank Overdraft Programs

It’s a good idea to learn what options you have to handle the situation when you spend more than you have in your account. Options may include:
  • Linking your checking account to your savings account so the overdrawn amount is taken from your savings account. Essentially, you’re borrowing from yourself so you don’t have to pay interest or high overdraft fees, although you may pay a small funds transfer fee. Remember, if you use money from your savings account to pay everyday expenses, be sure to replenish your savings account.
  • Linking your savings account to a line of credit. You’ll pay interest on any balance you carry and you may be charged an annual fee. The sooner you pay off the money you borrow, the less you’ll pay in interest. Still, this option may be less expensive than traditional fee-based overdraft options.
  • Enrolling in an overdraft program for which you either pay a monthly fee or a per-item charge. Fees can add up very quickly. If you use these repeatedly, they can become a very expensive form of credit. Also, with many of these programs, the bank does not guarantee you that it will cover any or all overdrafts.

Here is some information to help you compare two major categories of overdraft programs.

  Lines of Credit and Linked Savings Accounts Per-item Overdraft Programs
How do I enroll?
  • You must request this.
  • You may be automatically enrolled except for certain ATM and POS debit card transactions.
Does the program cover ATM and POS debit card usage?
  • Generally, yes; but refer to your account disclosure.
  • You must “opt-in” for coverage.
Are there any fees?
  • Possibly a small transfer fee for linked savings.
  • Interest plus other potential fees for overdraft lines of credit.
  • Cash advance fees, plus interest at the cash advance rate, if using a credit card.
  • Per-item overdraft fee if the bank honors the transaction.
  • NSF fee if the bank does not honor the transaction.
  • Possibly daily fees for every day your balance is negative.
  • Possible interest.
Do I have to have another accounts with the bank?
  • You must have a savings account, overdraft line of credit, or credit card that can cover the overdraft.
  • No.
Must the bank pay overdraft items?
  • Yes, if you have sufficient funds in your savings account or available under your line of credit.
  • No. Bank isn’t obligated to pay an overdraft, so approval of overdraft items is at the bank’s discretion.
Potential benefits?
  • Linking to a savings account or credit line may be the least costly way to handle overdrafts.
  • Saves the cost of additional charges from returned checks.
  • Saves cost and embarrassment of fees from merchant for bad check if bank honors item.
Potential risks?
  • Linking to a credit card may result in costly cash advance fees and higher interest rates and a never-ending cycle of debt.
  • Overdraft fees add up quickly.

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