CHECKING ACCOUNTSChecking Accounts are for those who have a steady income. By steady income I mean High School teens with part time jobs, cramming college students, and young adults in the work force receiving a Paycheck every one to two weeks. Checking Accounts are as simple as Saving Accounts but they can be tricky if you don't keep track and can put you into the RED ZONE. Never go into the negative or red zone! EVER. This only hurts you financially.
Step 1: INTEREST or NON-INTEREST CHECKING
Choosing which type of Checking account you want varies from Bank to Bank much like the Rates do. Remember back in Crack the Safe where I showed you how to find the highest interest rates for your Savings Account? This now is going to take second place when searching for a Checking Account.
Checking accounts are trickier in that they have things like NSF fees, and limit rules. First you want to decide if you want to have a checking in the same location as your Savings. There's no big deal if you don't some people do business at multiple banks, it's your money!
INTEREST Checking Accounts are accounts that gain interest for you having money in your account that stays above a certain level. Some banks require you to have a minimum amount of dollars in your Checking account in order to receive the interest and not receive a service charge. An example would be you are required to have $25 in your checking at all times. This means that if your account ever falls below $25 you’re subject to not receive the interest for that month AND you get a Service charge for not keeping at that amount. That service charge can cost you as much as $5 to 30$ depending on your bank.
$$-Interest checking also has some perks to it like free checking and sometimes free checks this all depends on the bank though.
NON-INTEREST Checking Accounts are accounts that do not gain any interest for you having money in it. Whatever you put in there stays in there and doesn't change. You open the account with $25 and you don't do anything with it. Come back two months later and check your account there's still just $25. That's a Non-Interest bearing account. These Non-interest baring accounts typically have a lower minimum to open. So say Interest checking requires you to have $200 to open the account and you need to say at $200 to gain the interest. With a Non-Interest baring account you could open the account for much cheaper, say $25 and not get as much service charged to you for falling below it say $2 instead of $5-30$. But this type of account comes with its downfalls apart from no free money.
Like a ten-cent $.10 check charge on each check cleared per statement cycle.
This means that if you wrote a check on your Non-Interest baring checking account you'd be charged $.10 cents for writing it. So say you wrote 5 checks for the month of January. 5*.10 = .50 so you get charged $.50 cents when you get your statement in the mail for January.
Like a ten-cent $.10 check charge on each check cleared per statement cycle.
This means that if you wrote a check on your Non-Interest baring checking account you'd be charged $.10 cents for writing it. So say you wrote 5 checks for the month of January. 5*.10 = .50 so you get charged $.50 cents when you get your statement in the mail for January.
Words that were used but not explained
NSF or Non-Sufficient Fund means that you did not have enough in your account to cover the check or meet the requirements for that month's minimum or to gain interest.
Service Charge means a charge is placed and automatically taken from your account because you had an NSF fee. It can be as much at $2-30$! That might not seem like a lot $2, but if you have enough of them throughout the year that can be as much as $100! And if it's a $30 check charge look out! Just two of them and you're at $60! Three and you're at $90!
Limit Rules these were explained to you by the bank customer service reprehensive that spoke with you when you opened the account. It's also in the pamphlet they gave you when you opened the account and was explained all the rules it encompasses. That Limit Rule is what is required to keep your account free from getting NSF fees or Service Charges. PAY ATTENTION TO IT!
STEP 2: THE CHOSEN ONE
Now that you've chosen an account to open be mindful of what you have in it. The bank already set you a goal to keep in it. Now I want you to give yourself one more. I want you to give yourself a goal, from either $50 dollars to $200. If you think you can do more then go for it! But don't place it where you're liable to fail!
Your goal is to keep your account not at the banks minimum but HIGHER. Set your goal above what they want you to have in there! Say your account requires you to have $200 in it. You set yourself a $100 goal. You now have to keep $300's in your account at all times and never fall below it. While you don't get a service charge for falling below your new goal you should feel disappointed or guilty that you didn't meet your own expectations and requirements. This amount can rise every 6 months to each year if you want. So say you kept $300 or above in your account for 6 months and you think you can do more. Then raise the bar. Instead of $300 make it $350 or $400! Keep raising the bar in your checking and you can even do the same with your Savings! Watch your money grow and you weren't even really doing anything!
Step 3: WATCH YOURSELF
Here's where I'll introduce the level of fail that can come with a checking account. You ever hear in your parents or friends conversations things like bounced check, late charge, fell below and keeping the checkbook straight? If you have they've done one thing. Not keep track! This only gets worse when there's a Debit card involved or Credit card (which we'll talk about later).Your goal is to keep your account not at the banks minimum but HIGHER. Set your goal above what they want you to have in there! Say your account requires you to have $200 in it. You set yourself a $100 goal. You now have to keep $300's in your account at all times and never fall below it. While you don't get a service charge for falling below your new goal you should feel disappointed or guilty that you didn't meet your own expectations and requirements. This amount can rise every 6 months to each year if you want. So say you kept $300 or above in your account for 6 months and you think you can do more. Then raise the bar. Instead of $300 make it $350 or $400! Keep raising the bar in your checking and you can even do the same with your Savings! Watch your money grow and you weren't even really doing anything!
Step 3: WATCH YOURSELF
When opening a checking account there will be an item you are given called a Check Register.
This is just an example I found of a blank one searching the net. Notice how it has specific columns for keeping track and your records straight of what you spend and where. This is so you don't fall into the RED. If you don't get into a habit of tracking what you spend you're going to be in a load of trouble later.
RULE 2 WRITE IT DOWN TO STAY RICH!
There are several other ways to keep track of what you spend and where and that is called Duplicate Checks. Duplicate Checks work with carbon paper meaning you can fill out your check and have what you've written press through the two special papers behind it and leave you a copy of the check attached in your checkbook. These Checks are a little more expensive but if you can't keep your check register straight or remember what checks you made out then maybe you should try them.
Another way to keep track of your account is a new thing the banks offer called ONLINE BANKING and TELEPHONE BANKING. Online Banking means you can access your account via the internet on the banks own safe and secured website. This can also provide you with a 24 hour instant check up on your account. You can see how much you've earned, what's been paid, what your accounts available balance is and even how much interest you've gained! Online banking can also offer instant transfers and online bill pay! Those transfers will come in handy later on as well as Bill Pay.
Step 4: THE CHECK
Checks come in various styles and colors but they all come at a price. This is important if you write a lot of checks! Word of Advice, GO CHEAP or FREE. Do you really need the limited edition painted background checks with the foil embossed glass slipper that cost $32.00 per box of 120 checks? No. Don't EVEN say yes because the answer is No. You don't. Why? Because you can get a box of 150 plain checks for cheaper. Sometimes even for FREE from your bank! Cheaper is better for saving your hard earned cash! At least in this sense. Remember this all about getting BIG BUCKS! Spending your money unwisely isn't what we teach here.
HOW TO FILL OUT A CHECK Above is a typical check
Top of the Check Will already have your Name, Address and possible Phone number on it.
Pay to the Order of: This is where you will place the NAME of the Individual or Place recieving the check. Example: JC Penny's
In the Box on the Right: You will place the amount the check is for. Example: $54.37
On the line below that has Dollars: Is where you will write out the boxed amount. Fifty-four Dollars and 37/100. You do not have to write out the cents like thrity-seven cents. You can just write 37/100.
Bottom of the Check
For: For means you wright what it is you've purchased on the line. So in this mock case a Blender that was on sale. So you would write Blender.
Final Blank line on the right: You would write your Signature. Your signature is unique in how you write your name and without it the check cannot be cashed.
Numbers along the bottom: The numbers along the bottom of a check are two things. Your banks Routing Number comes first followed by your Checking Account Number. This is why you NEVER want to lose your checkbook or misplace a check! It's important to keep it together and be responsible because if not people could steal your idenity and money!
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