Checking Accounts - a Resource from Three Rivers FCU

Staying in control of your account and your finances is simple if you master a few basics - check writing, record keeping, and balancing - and know a few checking account do's and don'ts. With these skills and know-how, you'll find that managing your account can be easier than you think!
Terminology you should know:

Automated Teller Machine (ATM): Also known as the money machine or cash machine.
Bad Check: A check that is written when there is not enough money in the account. AKA; bounced check.
Balance: The amount of money you have in your account.
Cash: Money in the form of bills or coins.
Check: A document used for payment.
Check Register: A form to keep track of your checking account transactions.
Checking Account: A payment method to manage your money efficiently.
Cleared Check: A check that has been processed (funds withdrawn) and listed on your monthly statement.
Deposit: The money you put into your account. Or (verb) to put money into your account.
Dividends: Money paid into you
Endorse: To sign your name on the back of a check in order to cash it or deposit it.
Financial Institution: A business that deals with money. For example, a bank or credit union.
Less Cash Received: The amount of cash you get back when you make a deposit.
Memo: The area on a check that notes what the check was written to pay for.
Nonsufficient Funds Fee: The fee charged when a check does not clear due to lack of money in your account.
Outstanding Check: A check that is still going through financial institution processing (funds are still in account).
Overdraft: When your account goes below zero-there is not enough money to cover the withdrawal.
Reconcile: A process to make sure your checkbook balance matches the statement balance for your account.
Reconciliation Form: A form provided with your statement to help reconcile your account. See Reconcile.
Recording a Transaction: The act of writing down a transaction in your check register. See Transaction.
Statement: The papers you get every month from Three Rivers that lists monthly account activities.
Transaction: When funds go in or out of your account (i.e. deposits, withdrawals, fees, ATM or transfers).
Void: The check is not good or not usable. Write "VOID" across a check, tear it up and throw it away.
Withdrawal: To take money out of your account.
Writing the Check
  1. DATE: Write in the day you are writing the check.
  2. PAY TO THE ORDER: Write the name of the person(s) or place(s) you are writing the check to.
  3. $ AMOUNT: Write the amount the check is for in numbers. Start the number in the far left side of the box so no one can add numbers to the amount.
  4. DOLLARS: Write (in words) how much the check is for. Again, start at the left side. Write the cents as a fraction and draw a line immediately following the fraction and extend to the end of the line.
  5. SIGNATURE: Sign your name here exactly as it appears at the top of the check. Be sure not to sign it until you intend to give it to the recipient so no one else can use the check.
  6. MEMO: Indicate what the check is for.
  7. DONE: Remember to enter the check information in your check register!
Recording Your Register
  1. NUMBER: This is the number in the upper right corner of the check.
  2. DATE: This is the date you wrote the check
  3. DESCRIPTION OF THE TRANSACTION: This indicates who the recipient of the check was and what the check was for.
  4. PAYMENT/DEBIT: This is the amount the check/debit was for.
  5. CODE FOR TRANSACTION: Enter in the code for the non-check transaction. Once the transaction clears, place a checkmark through the code.
    Typical Codes: D=deposit, ATM=automatic teller machine, DC=debit card, TT=telephone transaction, T=tax deductible, O=other
  6. SERVICE FEE: If there is a fee associated with the transaction, record that fee in this space.
  7. DEPOSIT/CREDIT: Use this space to record money that is added into your account, such as deposits.
  8. BALANCE: This is where you keep track of the amount you have in your account. If the transaction takes funds from your account, subtract the amount from the previous balance. If it adds to the balance, remember to add it. The money left is your balance
  9. DONE
Your Monthly Statement
  1. Look at your statement. Find the first check number listed.
  2. Find the same check number in your check register. Place a check in the CODE area to indicate the check has cleared. Do this for every check on your statement. If you see checks in your register that do not appear on your statement, do not check them off. They will appear on a future statement.
  3. Do the same procedure for deposits and other transactions.
  4. Check your statement for any service fees or dividends that may not be included in your check register yet. If there are any, enter them and update your balance.
  5. Now your checkbook should be up to date. Most of the time, the balances on your statement and checkbook will not match. This is normal. It occurs because of outstanding transactions that may not have cleared your account yet (the transactions that are not checked in the CODE).
  6. Next, take the reconciliation form from your statement. Fill in the information that is asked. This will help you determine if the balance in your register is correct. The ending balances for your register and statement should match. If they do not, check to see if you forgot to include transactions or made mathematical errors in your balance column of your register.
Additional Tips

Remember the #1 rule...Only write checks when you have enough money in your account. Other important checkwriting tips include:

  • Write your checks legibly.
  • Write the check amount as far to the left as you can. This prevents others from adding in numbers, making the amount of the check larger than you intended.
  • Always use a pen to write checks.People can erase the numbers when you write in pencil.
  • Don't erase mistakes on a check.Either write "Void" across the check, write "Void" next to its number in the check register and tear up the check. OR fix the check and write your initials next to the mistake.
  • Don't sign blank checks. They can be easily stolen or used by someone else.
  • Use restrictive endorsements.When you want your check to be very safe, like when you send it to your financial institution in the mail, use this kind of endorsement. Write "for deposit only" and sign underneath. Now the check can only be deposited into your account and not cashed.
  • Don't use other people's checks or let them use yours.
  • Print the right date on your checks. The teller's may not accept checks that have incorrect dates on them -- especially if the date has not even occured yet.
  • If you must, be cautious when post-dating a check.If you're paying someone with a post-dated check, notify them so they aren't surprised when their bank doesn't credit the check to their account immediately. Ideally, ask the party to wait to cash the check until the date written on the check. This helps avoid possible bank fees if the check is accidentally cashed too soon.
  • Always keep your checks in a safe place.Your checks are another form of money. They can be stolen and used by other people just like cash. If your checks are ever lost or stolen, contact your financial institution immediately.
  • Destroy voided or unused checks and deposit slips.There is a line of computer numbers at the bottom of every check called a MICR code. Counterfeiters can use this information to fraudulantly use your account. To prevent fraud, thoroughly tear up or shred all checks and deposit slips.
  • Record every transaction.Keep track of when you use your debit card, any money you take out of the ATM, and any other withdrawals - they add up quickly. It takes only a few minutes and can prevent overdrafts and additional fees.In addition, use all the columns in your register so that you can easily identify transactions. For additional assistance, our on-line training tool can show you how to fill in your register correctly.
  • Keep a running balance in your checkbook. If you don't calculate your balance right away, you run the risk of spending more money than you have or dropping below your minimum balance resulting in additional fees. Record-keeping isn't your strong suit? Don't worry. You can now get checkbooks that make a carbon copy (a virtual duplicate check) each time you write a check. Though NOT an alternative to balancing your account, carbon checks allow you to keep a record of your purchases until you get an opportunity to write them in your register.