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How to manage your checking account

If you're like most people, you write a check about every other day. It’s so automatic you probably don't think much about it.

And once you establish good checking habits, you don't need to think much about it. Here are a few simple ways you can manage your account wisely.


How to write a check

Direct deposit protects deposits from theft, but a forger still can use your stolen checks or discarded deposit slips, and "your" signature, to steal from your account. You also should develop good habits to reduce the possibility that honest errors will result in mistakes in your account. Risk management experts offer these suggestions:

1. Don't use pencil or erasable ink. Avoid ink colors other than blue or black. Many credit unions record cleared checks on microfilm, which doesn't show red ink clearly, for example.

Pen and Check

2. Use the correct date. Even a post-dated check can be deposited for payment.

3. Don't make out a check to "Cash." This allows anyone to cash it. Instead, write in the name of the cashing institution or your own name.

4. Draw a line after the name of the party who's supposed to get the money. This prevents a thief from becoming an alternate payee by adding the word "or" and an alias.

5. Don't use abbreviations on the payee line. A clever forger can change such terms as "Co." or "Inc." into believable names.

6. Print figures as close to the pre -printed dollar sign as possible. This makes it hard to raise the amount by inserting a digit, for example, changing $ 25 to $125.

Don't think only large, obvious amounts are at stake. One credit union teller described a fraud where a grocery clerk raised the amount on checks by $10. For example, she would insert the numeral 1 before the 9 in $9.32 and squeeze the word "teen" between the written "nine" and "32/100." The clerk pocketed $10 from the cash drawer several times a week.

7. Print the written amount in capital letters, which are much harder to alter than script. Print the amount beginning at the extreme left and draw a line through the rest of the amount space. Otherwise, TWENTY-FIVE could become ONE TWENTY-FIVE or TWENTY-FIVE HUNDRED.

8. Develop a form of your name to use only checks, and when you sign checks and other documents. For example, if you're other documents. For example, if you’re known as "Ed Miller," reserve "Edward Miller" or "Edward George Miller" for checks. With this special signature on file and on your driver's license or similar identification, anyone who presents your check for payment with any other form of your name will be suspect. And, a forger will need more than your personal correspondence to copy your signature.

9. Sign your name rapidly, freely, and legibly. Connect all letters and avoid elegant flourishes. Play with decorative in personal correspondence if you like, but keep your legal signature consistent.

10. If carbonless copies of written checks don’t "block out" your signature, obscure your signature on used checks. Prevent leaving an impression of your name on the following check by filling in each check except for your signature, then removing the check from the pad and signing it on a hard surface.

11. Never pre-sign your checks.

12. If you make a mistake, write a correction and initial it if you can do so neatly. If not, rip up the check, mark it "void" in your register, and start over.

13. Make your deposit before you write the check it's supposed to cover. Checks clear faster than you think, and it's not worth paying an NSF (non-sufficient funds) charge to play beat the clock. Ask at the credit union about overdraft protection.

Remember that your account balance changes continually as transactions clear. So don't rely solely on your balance from an ATM (automated teller machine) receipt or from a phone call to the credit union.

How to deposit a check
You must endorse - or, write your signature on - a check before you can deposit it. Some credit unions like to see your account number as part of the endorsement. If there's an error in your name on the face of the check, you must endorse the check showing the error. Then sign your name correctly just below the first signature for verification.

Often you’ll use a "blank" endorsement by simply signing your name as shown on the face of the check. The problem with a blank endorsement is that it makes the check negotiable by anyone presenting it for payment. Anyone finding a lost, endorsed check can cash it for its face value.

You can protect yourself if you specify that a check is "for deposit only" above your signature. This is called a "restrictive" endorsement. Another common endorsement is "special," and limits the use of the check. You can use the special endorsement "pay to the order of" and then name the party to whom you’re signing over the check; remember to include your signature.

When you deposit a check, you may not have access to the funds right away. The Expedited Funds Availability Act, implemented by Regulation CC, determines how long an institution may "hold" a check before crediting your account. Your credit union will inform you of its funds availability policy. The policy will depend on where you deposit your check - with a teller, by mail, or at an ATM - and on where the check is from- the government, a local party, or out-of-state, for example.

The staff at BACU can help you develop good check habits. Ask them for help when you have questions.

How to reconcile your account
You should never be casual about your checking account. You want to correct any error as soon as you discover it, so reconcile checks promptly. If you can't reconcile your account soon after your statement comes, at least verify deposits -- so you're not writing checks against nonexistent funds.

Reconciling doesn't take long and will take less time as you become skilled at it. You'll need all deposit and withdrawal slips for the month, including any from ATM transactions. (You already should have recorded ATM transactions in your check register.)

Sit down with your statement and verify deposits, both date and amount. Make a check mark on the statement for each one. Use your check carbons, and compare each check that has cleared against the entries in your register. Compare each amount in the register and the same amount in the statement, until you've checked them all. Now verify all deposits and withdrawals made at an ATM.

If your account reconciles, lines 4 and 8 (below) will be the same. If they're not, keep at it until you spot the error. If you can't find the mistake, ask for assistance at your credit union.

Here's how to confirm your balance:

1. Start with the balance in your register: $ _________________________________
2. Subtract any service charges that are on the statement. - _______________________________________
3. Add any dividends your account earned. + _______________________________________
4. This is your new register balance: = _______________________________________
5. Start with the end balance from the statement. $ _________________________________
6. Add recent deposits that aren't on the statement. + _______________________________________
7. Subtract the total of all checks written but not cleared, and ATM withdrawals since the statement. - _______________________________________
8. Your new balance: = _______________________________________

   
   
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