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Successful Management of Your Checking Account

Submitted by admin on Mon, 08/27/2007 - 21:25.

How does your sharedraft(checking) account fit into your personal finance picture?

Successful checking account management will reduce the chance of checking account fraud, non-sufficient funds(NSF) occurances-or 'bouncing' a sharedraft(check)-and late payments, all of which can negatively affect your reputation and harm your credit record.

To manage your checking account successfully, you must understand three basic parts of checking account management:

  • sharedraft writing,
  • sharedraft endorsing and
  • sharedraft account balancing.

Getting Started

You will use duplicate sharedrafts. The duplicate copy is a carbonless form located under each sharedraft. Information written on a sharedraft is copied onto the duplicate, giving you a permanent, convenient record of each check you write.

Prepare your sharedraft book

  • Place the check pad with lowest number inside your sharedrafts protective cover.
  • Put the check register in the other pocket.
  • Make sure you place the clear plastic divider under the check and duplicate copy-preventing what you write from filtering through to the remaining duplicates.
  • After you write the check, remove only the check and place the plastic divider under the next check/duplicate set. Duplicate copies remain in your checkbok and provide a permanent record, so you can record your transaction immediately or later.

If you do use single checks, you must remember to record each check in your check register as soon as it is written.

Check-writing basics

Follow these steps to properly write a check...

  • Complete the date line.
  • Write or print the name of the person or company you are paying.
  • Enter the dollar amount in numbers($85.27 or $20.00).
  • Write the legal amount in word, starting as far to the left as possible. Write in amounts of dollars and fractions of dollars. For example: $10 is written Ten and no/100: $251.41 is written Two hundred fifty-one and 41/100. Fill in any remaining space with a line to the right of the amount. This will prevent anyone from increasing the amount.
  • Sign your name exactly as you signed the signature card when you opened your account.
  • Complete the Memo line (an optional reminder).

Helpful check-writing hints

  • Write in permanent ink so nothing you wrote can be changed.
  • Write clearly.
  • Fill in all blank lines with the proper information.
  • When you pay in person with a check, you usually must show identification. This can be a state I.D., a driver's license, a credit card or other form of identification.
  • Never sign a check until all information on it is completed.

Make a Mistake?

  • Write VOID in big letters across the check.
  • Write VOID for the check number in your register(or on your stub).
  • Rip up the check and write a new one.

Check Endorsing

A check must be endorsed before it's deposited. There are three endorsement types: blank, restrictive and special.

  • Blank Endorsement. Sign your name on the top back of a check. Anyone can then cash the check. For security, only endorse a check this way when you are ready to cash it.
  • Restrictive Endorsement. To restrict a check for deposit only, write 'For Deposit Only' above your endorsement. Only the payee can write a restrictive endorsement. Use this endorsement when mailing a check for deposit or if someone else deposits your checks.
  • Special Endorsement. This make a check payable to a third party and prevents others from cashing it. Write 'Pay to the order of' and the person's name, then sign your name below.

Tips on Endorsing Checks

  • When you endorse a check, sign your name exactly as it appears on the front.
  • When your name is spelled incorrectly on the front of the check, endorse it as it appears on the front. Below that, sign your name correctly.
  • If you give someone a check that's made out to you, be sure to write on the back 'pay to the order of'and the person's name. Sign your name below that.
  • Remember: You are responsible for payment on any check you write.

Checkbook Register

The checkbook register is the place where you record debit and credit transactions affecting your account. A debit is any transaction that subtracts funds from your account and a credit is any transaction that adds funds to your account.