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Know Your Paycheck
Checking Accounts
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CHECKING ACCOUNTS

Checking accounts can be a great way to manage your money and pay bills, and they are easy to set up. If you don't have a checking account now, college is a good time to open one.

Checking accounts can:

  • Keep your money safer than if you carried cash

  • Provide receipts for bills paid

  • Remind you what you've spent money on (especially if you use duplicate checks)

  • Permit you to bank by phone and pay bills electronically with your checking account and routing number

  • Allow your employer to directly deposit your paycheck into your account

  • Provide you with an ATM or debit card that allows you to get cash quickly (there might be an annual fee for this option)

  • Help you save money by avoiding money orders or cashier's checks

Like most tools, a checking account can be useful only if you take care of it. That means writing everything down, especially when you use a debit card.

 

WHAT’S A DEBIT CARD?

Debit cards look like and act like credit cards, but there's an important difference. Whenever you use your debit card to pay for something, the money is taken immediately from your checking account through an electronic transfer.

Debit cards also can be an easy way to get cash. Just be sure to write down any withdrawals you make, just like writing a check. Watch out for those fees when you use your card at some ATM machines. They can add up!

Also, your debit card doesn't give you a "grace" period the way a credit card does. So before you use it, be sure you have enough money in your checking account to cover the purchase.

 

The downside of a checking account is that it can cost a lot in fees if you don't reconcile it. Reconciling your account means to record all activity in your account and then determine the reasons why your balance does not agree with the balance on your checking account statement.

If you write a check or use your debit card to pay for something and don't have enough money in your account to cover it, you'll be in for a rude shock. That's called "bouncing" a check or being "overdrawn."

Banks typically charge about $25 for that mistake, but they can charge more. Plus you'll have to pay fees to the merchant or store where you wrote the check (and they might not allow you to write checks again). Your bank may note this in your banking history, and this can hinder your ability to secure a loan.

The following pages will give you more information on checking accounts:

INTRO TO CHECKING ACCOUNTS
FINDING THE RIGHT ACCOUNT

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