Checking Account Balancing

Balancing Your
Checking or
Savings Account

This presentation will provide guidance on effectively

managing your checking or savings account, including

tips for reconciling your account and maintaining a

healthy financial balance.

What is a Checking Account?

Deposit Money

You can put money into your checking

account through direct deposit, cash,

or electronic transfers.

Withdraw Money

You can withdraw money from your

checking account using cash, checks, or

a debit card.

Access Funds

Your checking account provides you with

easy access to your money whenever you

need it.

Track Spending

Checking accounts allow you to keep

track of your transactions and monitor

your spending.

In summary, a checking account is a convenient way to manage your day-to-day

finances, providing you with the ability to deposit, withdraw, and access your

money, as well as track your spending.

What is a Savings Account?

Similar to Checking

Account

A savings account is similar

to a checking account, but

you typically access the

money in a savings account

less frequently.

No Checks

You probably don't have

checks for a savings account,

but you can link your debit

card to the account and

withdraw money from it.

Earns Interest

An important feature of a

savings account is that it

can earn interest - the bank

will pay you for keeping your

money in the account.

In summary, a savings account is a type of bank account that allows you to store and

grow your money through the interest earned on the account balance.

How to Balance Your Account

Gather Your

Financial Records

Collect your bank

account statement,

checkbook register, and

any other records of

transactions you have

made recently.

Compare Your

Records to the

Statement

Go through your

financial records and

compare each

transaction to the

corresponding entry on

your bank account

statement. Ensure that

all deposits,

withdrawals, and checks

written are accurately

reflected.

Identify any

Discrepancies

Note any differences

between your records

and the bank statement.

This could include

missing or incorrect

transactions, fees, or

interest earned.

Investigate

the

Discrepancies

Determine the reason

for each discrepancy.

This may involve

contacting your bank,

reviewing additional

documentation, or

reconciling any

outstanding

transactions.

Reconcile Your

Account

Once you have identified

and resolved all

discrepancies, update

your financial records

to match the bank

statement balance. This

will ensure your

account is accurately

balanced.

Example: Balancing the Account

•Review your records

Carefully review your checkbook register, online banking

transactions, and any other records to identify the specific

transactions that caused the $133.51 difference between

your records and the bank statement.

•Identify any missing or incorrect

transactions

Look for any transactions that may have been overlooked,

recorded incorrectly, or that are not reflected in your bank

statement.

•Reconcile the differences

Investigate each difference and make the necessary

adjustments to your records to align them with the bank

statement.

•Ensure all transactions are accounted for

Verify that all deposits, withdrawals, and other transactions

are properly recorded in your records and match the bank

statement.

•Resolve any discrepancies

If there are any unresolved discrepancies, contact your bank

to clarify and resolve the differences.

•Update your records

Once you have identified and reconciled all the differences,

update your records to accurately reflect your current account

balance.

Problems With Uncleared Checks

Fluctuating Account

Balance

If a check takes a long time

to clear, your account

balance may appear higher

than it actually is, leading

to potential overdrafts when

you make other purchases.

Unexpected Overdraft

Fees

When a delayed check finally

clears, it can overdraw your

account and result in

expensive overdraft fees from

your bank.

Difficulty Tracking

Spending

Uncleared checks make it

harder to accurately track

your actual account balance

and monitor your spending,

risking budget issues.

Prompt cashing of checks is important to maintain an accurate account

balance and avoid unexpected fees or overdraft issues.

What is Check Clearing?

Moving Funds

Check clearing is the process of

transferring funds from one

account to another through the

banking system.

Clearing Cycle

The clearing cycle involves the

exchange of the physical check and

the corresponding funds between the

depositor's bank and the payer's

bank.

Account Reconciliation

Check clearing allows the account

holder to reconcile their checking

or savings account by tracking the

movement of funds.

Check clearing is a critical process that ensures the timely and accurate

transfer of funds between accounts, enabling account holders to maintain

accurate financial records and manage their money effectively.

The Check Clearing Process

Deposit Check

A person or business deposits a check

into their bank account, initiating the

check clearing process.

Digital Check Copy

The bank then scans and creates a digital

copy of the deposited check to send to a

clearing house.

Clearing House

The clearing house receives the digital

check copy and coordinates the transfer of

funds between the payer's and payee's

banks.

Holding Funds From Checks

Depositor's History

Banks may place holds on check deposits if

the depositor has a history of overdrafts,

non-sufficient funds, or other negative

banking behaviors.

Payee's History

Holds may also be placed if the bank has

concerns about the check issuer's reputation

or history of returning checks.

Check Amount

Larger check deposits may be subject to

longer hold periods, as the bank ensures the

funds are available before releasing them to

the account.

Funds Availability

Banks may place holds to allow time for the

check to clear and the funds to become

available, especially for out-of-state or

large checks.

Understanding the reasons behind check hold policies can help you

plan and manage your account balances effectively.