I went grocery shopping with my older brother recently. We chose the shortest line to pay (since self-checkout had a really long line). Little did we know the cute grandma in front of us was going to pay with a check. It felt like we waited ages for her to write out her check and then even longer for the cashier to process the payment. In reality, it wasn’t a long time, and only felt like it because it’s rare to see someone pay with a check in a grocery store these days.
This got us talking about checkbooks—we both learned how to balance a checkbook when we opened our first checking accounts, but didn’t use that skill even once after that. It wasn’t because of a lack of knowledge or sloppy money managing, but because that skill wasn’t really relevant to the way banking was changing. Neither of us used checks often and more regularly kept track of balances using online banking. Now, neither of us use checks ever and we keep track of our money and balances using online banking and mobile banking.
So the question is, what do I wish we had learned instead of how to balance a checkbook?
What is a checking account? In the most basic sense, it’s important to know what a checking account is and how it differs from a savings account. Typically, it’s easier to access and use money in a checking account, also called a “demand account.” A checking account comes with checks and/or a card that you can use to spend money. You can access the money in your checking account with checks (let me know if you need me to explain what these ancient “checks” are…), through an ATM or by electronic debits when you use your card in a store or online. With a savings account, you would need to withdraw cash to use that money in a store. Typically, savings accounts have more restrictions on how many times you can make withdrawals per month, how much you can withdraw in a day and may have a required minimum balance, and often, come with a better interest rate.
Find a free checking account. There are still free checking accounts out there. Usually a “free” checking account is a checking account with no minimum balance requirement (the amount you have to keep in your account) and no monthly fee. Check with community banks near you, as many still offer free banking services for many products, including free checking accounts that come with a debit card. Make sure you know what services your bank charges fees for—for example, you may be able to withdraw money from only certain ATMs without a fee, or you may only have a certain number of free mobile deposits per month. Try to think through whether the fees will keep you from using your account in a way that is convenient for you.
It may be best for you to have more than one account. I already had a savings account when I opened my first checking account and I’m glad I did. When I made deposits or had direct deposits into my checking account, I continued to make regular transfers into my savings. I notice that doing this keeps me from spending money I’d rather save. You can try automatic transfers into a savings account (here’s more information about that). You may find that it’s easier to save when you make those decisions ahead of time instead of when you’re out shopping.
What is the difference between using my card as debit versus credit? Many of the places you shop will allow you to use your debit card as “debit” or “credit” when you’re checking out. Some newer terminals say “US Debit” versus “VISA Debit.” First of all, whether you use your debit card as “debit” or “credit,” the money is coming from the same checking account, so don’t stress. “US Debit” or “VISA Debit” are just a different way of saying “debit” or “credit.” When you use the debit option, you’ll likely need to enter your PIN. When you use the credit option, you may need to sign for the transaction. Some merchants will only let you perform PIN-based transactions—each merchant is different.
There used to be a difference in how quickly the two types of transactions were processed, but they are typically the same now. I use one of my cards as credit because I can never remember my PIN, but I use another as debit because it’s quicker for me than waiting for a receipt to sign.
How soon does money come out of my account when I spend it and how soon is money available when I deposit it into my account? Transactions can take up to a couple of days to reflect in your account balance, so it’s important to note that when you’re keeping track of the amount of money you have. Deposits can take up to the next business day to be available in your account, although sometimes the money is immediately available. If you’re not sure of your balance, check your online banking account and make sure you look at any pending transactions.
It’s important to keep track of your balance. Find a way that works for you. I mentioned earlier that when I opened my first checking account, the banker showed me how to balance my checkbook using the check register (I just had to ask someone what that was even called). I never used it. Try more than one way to keep track of your balance: download your bank’s mobile app on your phone and make yourself log in every other day to make it a habit, get in the habit of looking at your online banking every week so you have that username and password totally memorized or use your bank’s customer service number to check your balance over the phone until it becomes easy to use the tele-banking service. Try as many of these methods as you like and make sure you do it enough to make it a habit.
If you aren’t regularly keeping track of your balance, you might accidentally overdraw your account or end up stuck at a register without enough money to buy something you need. Remember that there may be pending charges not reflected in your online balance yet. Knowing what you have and what you want to spend can relieve some stress when it comes to money.
Check your account regularly for fraud. Along with always keeping track of your balance, you should look through transactions on your account regularly. If you spot a transaction you don’t remember making, call your bank immediately and report it. The more quickly you report suspected fraud, the better.