Heading Out On Your Own – Day 3: How to Open and Manage a Checking Account

by Brett & Kate McKay on August 3, 2012 · 45 comments

in Heading Out On Your Own

For a young man just beginning to establish his financial life, opening a checking account is a small, but important, step in that process.  A checking account is the workhorse of your accounts.  It’s for money that you plan on spending or transferring to another account quickly. Because of the ease at which you can deposit and withdraw from a checking account, it will likely be the hub of all your financial activity.

Below we provide important tips and considerations on opening your first checking account. (While you’re at it, open up a savings account too for your emergency fund.) For those of you who already have a checking account, we also provide some friendly reminders on managing it wisely.

What to Look for in a Checking Account

Not all checking accounts are created equal. Some banks offer higher than average interest rates, while others offer accounts with no interest; some banks charge a monthly fee to keep your money with them, while others offer free checking accounts. Below we highlight a few things to consider when selecting and applying for a checking account:

Look for free checking accounts, but understand that a free checking account isn’t really “free.”  A free checking account is an account that doesn’t charge you a monthly service fee to keep your money in that account. Many banks used to offer free checking accounts without any strings attached, but those days are largely over. These days, most banks won’t charge you a monthly fee so long as you meet certain conditions. Usually the conditions are that you make a certain amount of direct deposits and debit card transactions each month, or you maintain a certain minimum balance.

If you fail to meet those requirements, the monthly service fee is around $5 at most banks.

Look for accounts with no minimum balance.  When you’re young and just starting out in life, your cash flow is likely minuscule. When I was in college, it was common for my checking account to dip below $100 despite my best efforts at budgeting. If you have a bank account that requires a minimum balance and you dip below that number, you’re going to be slapped with a penalty. Many free checking accounts have no minimum balance requirement (but require you to make direct deposits or debit card transactions to keep the account free), so select one of those.

Avoid checking accounts that offer higher than normal interest rates. They look enticing, but they usually require a minimum balance of a few thousand dollars.

Look for accounts with online access. You want to keep on top of how much money is coming in and going out of your checking account. It used to be you had to religiously keep track of every single one of your transactions in a check register if you wanted to know how much you had in your account. Today most banks offer free online services that let you check your account online. Get one that does. Also check if your bank allows you to hook up your accounts with services like Mint, YouNeedaBudget, or Quicken. Keeping track of your checkbook on your computer is much easier than using the old pocket register.

Ask how check “holds” are handled. Let’s say you get a big fat $2,000 from Grandpa to help pay for school. You deposit it in your account. You’re ready to drop a $2,000 money bomb at the bursar’s office the next day, right? Nope.

Banks usually place “holds” on checks from other banks, especially out-of-state banks, for a few days to ensure the check or electronic deposit will be honored by the issuing bank. During this hold period, you won’t have access to the money you deposited. For checks from local sources, the hold period is usually two days; for out-of-state check sources, the hold period can be up to five days.

It’s good to know your bank’s policy so you don’t spend money that you don’t have access to yet.

Get an account with a check/debit card. Most banks offer customers a debit card when they open up an account. Debit cards offer the convenience of credit cards, without the crippling high interest rates. Whenever you swipe a check card, your checking account is deducted.

What’s the Difference Between Choosing Credit or Debit on Check Card Readers?

Whenever you swipe your check card at a store, you’ll often be asked to select “credit or debit.” While both options will result in money being deducted from your checking account, they each process the transaction differently.

If you select “credit” and your check card happens to be a Visa checking card, your transaction is verified with your signature (sometimes), and will be processed through Visa’s networks. The benefit to you for using your debit card as credit is that you get to take advantage of Visa’s added security options to prevent against fraudulent transactions. You can also earn reward points with certain cards. Store owners have to pay Visa a pretty hefty service fee (usually 2% of the transaction) every time you choose credit, which is why, you may have recently noticed the check card readers at your favorite store bring up debit as the default option, forcing you to press the cancel button, and select credit instead.

If you select “debit,” you’ll need to enter your four digit PIN. After you enter it, your transaction will be processed through an electronic funds transfer, and funds are taken from your account instantly. You don’t get the same protections on your purchase as you do when you select credit and debit transactions aren’t eligible for reward programs. You can, however, ask for cash back when you make a purchase using debit. That means if your purchase was $5, you can have the store debit your card for $25, and the store will give you $20 straight from the till. That comes in handy when you need cash, but don’t want to pay an ATM fee. Be aware that store owners, especially mom and pop places, prefer debit transactions because of the reduced service cost.

Look for a bank with plenty of ATMs in the area and ask about ATM fees. You’ll have those days when you need quick access to cash. That’s where ATMs will come in handy. But the convenience of ATMs come at a price.  While most banks offer machines that don’t charge withdrawal fees for their own customers, banks will charge you a fee for using a competitor’s ATM. When you add that fee, to the fee, or surcharge, the competitor’s bank charges you to use their ATM, you’re looking at paying about $5 just to get your cash.

Should I Go With an Online-Only Bank?

In the past few years, the number of online-only banks has increased dramatically. Because they have less overhead than brick and mortar banks, online banks are able to provide higher interest rates and charge fewer fees. A few years ago, online banks like ING Direct and Ally had crazy monthly interest rates between 2%-4%, but they’ve since gone down to about 0.8-1%. Not fantastic, but still better than most traditional banks.

While checking accounts from online banks provide higher interest rates than traditional banks, I’d still open your first checking account with a traditional bank. Here’s why.

Things take longer to clear with online accounts. The internet is supposed to make things faster. Online banks didn’t get the memo. Checks and even electronic deposits, however big or small, take forever to clear online banks. For example, when I make transfers from my main checking account to my emergency fund that I keep in an online ING checking account, it takes about three days before I have access to that money. For large deposits or transfers, the wait is longer. Not good if you need money to clear fast.

You can’t easily deposit paper checks or cash with online accounts. If you ever get a check or cash for your birthday from Aunt Gertrude, depositing that money into your online banking account can be tricky. Most online banks require all your transactions to be electronic. But there are some that allow you to mail the check or cash in. Even if you can mail the paper check, it will be a while before you have access to that money — you have to wait for the check to arrive at the online bank’s headquarters, and then you have to wait another couple of days before the check clears.

However, some online banks are beginning to provide services that allow you to deposit a check from anywhere by simply snapping a photo of the check with your smartphone, so this is changing.

Many online banks also don’t provide wire services or cashier’s checks. That can get you into trouble when you’re buying a car or a home (or posting bond to get someone out of jail!), as those transactions often require a cashier’s check. If all your money is in an online bank on closing day, you’re sunk.

You get better service with traditional banks. The only customer service you get with online banks comes by phone or email, but there are some issues that are more easily done face-t0-face with a teller. Traditional banks also typically have a network of fee-free ATMs in your area; not so with online banks.

What You’ll Need to Open a Checking Account

Wipe that smile off your face. Haven’t you ever seen a 50 year old grown man apply for his first checking account before?

Opening a checking account is a breeze. Just walk into the bank and inform the teller that you’d like to open an account. All you have to do is fill out a short application, show the teller your photo ID, and deposit some money to open up an account. The amount you have to initially deposit will vary from bank to bank — some require only $1, while others ask for $50, $100, or even $250.

Some banks even let you open up an account online, but you’ll have to have an account at another institution that you can use to fund your new account.

How to Write a Check

Because we don’t typically write checks every day, when it comes time to do so, it’s easy to mess up. Here’s how you do it:

1) Always date your checks. 2) Write the name of the person or business you’re paying next to “Pay to the order of.” 3) Write the amount of the check in numeric format. You should start as far over to the left as possible. This prevents anybody from slipping in an extra number or two. 4) Write out the amount of the check in words. For the cents part, use a fraction with 100 as the denominator. In this example since it was $500 even, I wrote out “00/100.” 5) Sign the check. 6) It’s a good idea to write a short note on what the check was for. It helps with accounting.

Managing Your Checking Account

Now that you have a checking account, it’s important that you manage it effectively. If you don’t keep on top of the money coming and going from your account, you risk the embarrassment and financial penalties that come from spending money you don’t have.

Opt-out of overdraft protection. Overdraft protection means that if you make a purchase with your debit card, and you don’t have enough money in your account to complete the transaction, the bank will “loan” you the money…and charge you a $25-$35 fee for their “generosity.” But that’s a big price to pay to avoid the embarrassment or inconvenience of having your card declined or a check bounce. And these fees can add up fast, because here’s what many consumers don’t know: most banks will purposefully process your largest transactions first, and then your smaller transactions after that. So let’s say you have $285 in your checking account, and you buy a coffee for $3.50 in the morning, a sandwich for $5 at noon, and then some college textbooks in the afternoon for $300. The banks will process the $300 transaction first, even though it was made later in the day, thus depleting your account, and then charge you a $35 overdraft fee for the textbooks, another $35 fee for the sandwich and another $35 for the coffee, and bill you for $105 in total overdraft fees. Ouch!

Banks used to automatically enroll their customers in overdraft protection programs, but a court ruling in 2010 made that illegal. You can and should opt out of overdraft protection. But because overdraft fees were a big moneymaker for banks, they still aggressively try to get you to sign up. Every time I check my bank account online, I get a pop-up that asks if I’m sure I don’t want to enroll in their overdraft protection program. You just have to say no and keep saying no.

Check your account weekly. Make a habit of checking your account online every week. Not only does this keep you abreast of how much you have in your account so you don’t overspend, it gives you a chance to check for errors or fraudulent transactions. If you notice any errors or possible fraudulent transactions, notify your bank immediately.

Also, sometimes when you have something set up on autopay, like a gym membership or Netflix, that makes a withdrawal from your checking account every month, even when you cancel the service, they can “forget” to stop charging your account. Be on the lookout for this.

Understand that the balance your bank statement says you have could actually be more than you really have. This is something that trips up a lot of young people when they first get a checking account. Your bank says you have $750 in your checking account, so you pay your $500 rent. A few days later you get notice from your bank that you’re being charged an overdraft fee and you have an account balance of -$50.  What happened?

Well, a week earlier you wrote a check for $300 for tuition, but it still hadn’t cleared when you checked your checking account. After you sent a check to your landlord, the tuition check finally cleared, leaving you in the hole and facing a stiff overdraft fee.

Because of the delay between the moment the transaction occurs and when it actually posts, it’s important to track all your debit card transactions, ATM withdrawals, and checks written in a check register (You can use the old fashioned paper registers or a digital one like Quicken, YouNeedABudget, or Mint. I know some folks who use a simple Excel spreadsheet ). A check register lets you know how much you really have available in your account. Don’t think you can mentally keep track of it. At some point you’ll experience a brain fart. I know from experience.

Set-up online alerts for when your balance reaches a certain level. To play it safe, establish a base amount for your checking account that you’ll never go under. That small amount acts like a firewall for bounced checks. Take it a step further by setting up an alert with your bank’s online system that will notify you whenever your checking account balance gets within $50 of your minimum balance. Once you get the alert, cut back on spending and deposit some money.

Use direct deposit for your paychecks and pay bills online. Whenever you land a job, ask your employer to automatically deposit your paychecks into your checking account. You’ll have to sign a form and provide a voided check to get auto-deposits set up. Where available, pay as many of your bills online as you can and make them automatic. We’ll be talking more about that later this month.

Balance your checkbook monthly. You’ve probably seen your parents balance their checkbooks. Balancing a checkbook simply means reconciling the balance your bank says you have in your account with the balance you have in your records. Remember, with the delays between checks clearing, those numbers can be off.

People are divided on whether you need to balance a checkbook in our world of digital finances. But even with the speed of digital transactions, things can get off kilter in your account, so it’s not a bad idea to reconcile your account at least once a month. Money software like Quicken and YouNeedaBudget make this process a breeze. They’ll automatically reconcile your accounts with a click of a button. Sometimes, though, you’ll need to bust out the old pen and paper to do some figurin’. If that’s the case, follow these instructions from the fine folks at Mint.com.

Any other tips and advice for a young man opening his first bank account? Share them with us in the comments.

{ 45 comments… read them below or add one }

1 Andrew C. August 3, 2012 at 11:59 pm

There are many banks that offer truly free Student Checking, with no monthly fees and virtually no requirements. Be sure to check those out if you have a valid student ID.

2 Will August 4, 2012 at 12:07 am

Keep your receipts and check it against your statements, especially for restaurants and bars. The waiter/waitress has charged me more than I wrote down on two occasions. The bank reimbursed me when I complained that I was inaccurately charged. Since it was only a few dollars both times, the bank didn’t need proof. Were it a larger charge, my receipts would have also served as evidence.

3 Jacob D. August 4, 2012 at 12:13 am

Hey, Gents,

Just wanted to let you know that I give a huge recommendation to ING Direct. I’ve had nothing but good experiences there. You can deposit checks via photo, the customer service is superb, and they offer free services at Allpoint ATMs. Plus, it’s free and really simple to get into stock and bond trading from there, too.

Thanks for the great series,

Jacob D.

(P.S. – Moving out on my own in just a few months.)

4 Aaron August 4, 2012 at 12:15 am

Very useful information. Review your receipts. Keep an eye on the display when you’re checking out at the grocery store. And don’t let the guy behind you see your pin number.

5 Matt August 4, 2012 at 12:23 am

If you need a fantastic checking account, check out USAA. $25 dollars to open the account, no monthly fees, free overdraft protection (if you link another account to serve as the buffer), and the most AMAZING customer service of any bank. Their interest rates aren’t the most competitive, but if you’re looking for savings growth, you want a money market account as opposed to a regular savings account.

6 Jatin August 4, 2012 at 12:49 am

I use GnuCash (Open License) to manage my accounts. Its simpler and easier than QuickBooks and Peachtree.

7 Drew August 4, 2012 at 1:02 am

Another really good option is to look at local credit unions. Some have unique requirements to join(mine requires being an employee of the state), but you tend to get better treatment. Also, most of them are members of the ncua, so you can use any credit union’s atm for free.

8 Jacob August 4, 2012 at 1:26 am

A number of banks will let you set up a credit card as a backup to your checking account. If you ever overdraw the account, the credit card will be charged for the amount. It may have a fee attached to it, but it still is probably less than an overdraft fee.

9 Treavioli August 4, 2012 at 2:16 am

Also, know that when depositing change, be sure to put them in those coin sleeves. DO NOT bring your coins in a bucket, tupperware, piggy banks. Tellers will hate you and call you out. True story.

10 Matt August 4, 2012 at 5:04 am

Before settling with a “traditional” for-profit bank, be sure to check out local credit unions for checking services. They often have better service, less mysterious fees, and similar benefits to your local bank.

I set up a checking account at my credit union for the pocket-emptying cost of five (that’s $5) bucks. The checking service is free, there are no monthly fees, cheap overdraft protection, decent interest rates, and only a $5 minimum balance.

Additional bonus-their debit cards are connected not only with MasterCard, but also with a wide-spread ATM network, so even though there might not be any ATMs sponsored by my credit union where I am at any moment, I can usually find one where I don’t get charged an extravagant transaction fee.

Honestly, I have no urge to transfer to a bank anytime soon.

11 srlevine1 August 4, 2012 at 5:34 am

It is smart to write the word ONLY in front of the written amount to discourage check raising and tampering. Instead of writing “five hundred dollars” as shown in the example, you write “only five hundred dollars” making it harder to write something like “thirty five hundred dollars” and adding a “3″ in front of the numerical amount.

I learned this from Frank Abagnale — the “Catch Me If You Can” con-man — at one of his seminars.

12 Srinivas Kari August 4, 2012 at 6:54 am

I was very happy to see that I knew most of this stuff. I work as a software engineer and my checking account has all of the features mentioned above. I was unaware of the fact that the balance sent by the bank through periodic alerts could be different from the actual balance. I found this post extremely useful. Maybe you can add how to withdraw cash through the bank i.e by filling out the ‘withdrawal form’ instead of taking it out of the atm.

13 em August 4, 2012 at 6:58 am

Cash only. Banks are evil and will steal your money.

14 Nick August 4, 2012 at 7:13 am

Get a Visa card. Once it arrives, hide it away and don’t use it until you have a job. I know this sounds crazy but I was lucky enough to last until my mid-20s without either a loan or visa. I was always good with money but when I went to get my first loan at 24 the bank told me I had no history (my only acct was a joint acct with parents, despite it being only used by me). No credit history is as bad as a bad credit history when it comes to getting a loan. Get a visa and don’t touch it. Those four years of college while you are living on a combined budget of summer job pay and care packages from mom, you’ll be building up a good credit record which will pay you back when you go for that first house or car loan down the road.

15 Rogin August 4, 2012 at 7:35 am

Ah, I wish I had this guide when I opened my own account! Very detailed and informative. I remember trying to write my first check and having no idea what I was doing…

I disagree about online banks, especially for students. While you don’t have the convenience of a local bank to deposit checks and interact with a representative in person, you get whole bunch of other benefits. I’ve used USAA in the past, and Charles Schwab now, and with both you get refunded ATM fees. Plus, with Schwab you also get free international ATM fees and debit charges (not sure about USAA). This means that I have no worry about using an ATM whether I’m at home or at school, or even for studying abroad (which I am now).

For me, the biggest drawback to online banking is depositing checks, as Brett and Kate pointed out. While with USAA I had no problem – they have an online deposit process. But with Schwab, you have to mail your checks to their location in Texas. A little tedious, but worth it in my opinion.

I strongly urge anyone from opening an account with Bank of America. Both my parents and my brother had BIG problems with them, such as withdrawing small ‘service fees’ from them every month (they were quick to apologize, but refused to refund).

16 Tyler G. Serio August 4, 2012 at 8:07 am

I like the Art of Manliness checks. The bear was a good choice, haha. I think I’ll be starting an account myself sometime.

17 Ben August 4, 2012 at 8:24 am

Great advice! I would recommend that once you find a bank you like, stay there and get to know your banker. Having a strong relationship with your bank can help you later down the road when you need a fee waived, want a better interest rate or need a loan.

18 Keith Brawner August 4, 2012 at 8:50 am

Take a note to check out your local bank operations.

For instance, Old Florida National Bank, which only has seven branches in central Florida, has the following stunning number of features:
1 – no minimum balance
2 – no charge transfer in/out
3 – no charge online billpay
4 – use of ANY 6 ATMs monthly (a huge help when I was in NYC)
4.5 – unlimited use of Publix ATMs
5 – no monthly fee

Tampa Bay Federal Credit Union offers a similar deal (4%). Florida Central Credit Union offers another similar deal (4.5%).

Also note that 3% yearly is $25/month on a $10,000 balance (or a double-cheeseburger-meal/month on $2,000).

19 Doc August 4, 2012 at 9:13 am

If you qualify, you can’t go wrong with USAA. They are extremely efficient and knowledgeable. They have a vested interest in their clients and treat them with the respect the deserve. I’ve been a member over 40 years and have not had the first complaint with them. I do almost all of my business transactions with them. I trust them completely.

20 Brian August 4, 2012 at 9:14 am

Re; Debit cards – may be a good idea to mention that unlike credit cards, there is no limit to how much money can be taken from the account if it’s stolen and there is no recourse. If you lose a credit card, you CAN get that money back and are only repsonsible for, I think, $150 (???). But if your debit card is stolen and used, they can drain your account and you have no recourse. One reason I’m still leery of them

21 Jimbo August 4, 2012 at 9:35 am

As someone now in my 30s, excellent article… I’ve been there and overdrafted my checking account a few times.

Regarding balancing your checkbook… balance it every couple of days, not every month. It’s really quick and easy to balance your checkbook in our digital age. People used to do it every month, because that’s how frequently they received their paper bank statements in the mail. Now we can get an updated bank statement online any time we want.

I keep an updated Google Doc spreadsheet of my current bank balance (Column A = date of transaction; Column B = name of business; Column C = withdrawal amount; Column D = deposit amount; Column E = current account balance).

Each night, I’ll add any new deposits or withdrawal that have occurred. Then the spreadsheet software can auto-calculate the balance (E3 = E2-C3+D3). Auto-Fill Down on that column, and you have your current balance.

Every few nights, I pull up my account info on my credit union’s web site. Any row/transaction that has cleared gets highlighted.

This might seem like overkill. But if you’re a young man heading out on your own, odds are good that your margin for error is much smaller. It’s important to know if you forgot that $2.27 cup of Starbucks coffee, so you don’t get hit with a $35 overdraft fee.

22 Robert August 4, 2012 at 9:38 am

It might be different in the US, but in other countries it is normal that there is no ATM fee. Also, you can use ATM’s of other banks without any extra cost.

23 Tom Jackson August 4, 2012 at 10:44 am

A trick for budgeting:

I need to pay several annual dues and subscription payments. These often come up at year end, just when I’m paying for holiday presents. Solution? I set up a second checking account with auto-deposit from my paycheck. Every two weeks it sets aside $30. I don’t miss it during the year, and at year end I have enough to write all those checks at once when they are due.

24 Daniel H. August 4, 2012 at 10:44 am

I have had, on the whole, excellent experiences with credit unions in contrast with larger banks (although the credit unions of late have had less competitive interest rates).

Another perk to look for—in addition to ATM “networks”—is ATM fee reimbursements. My credit union will reimburse me (up to a limit) for ATM fees that other banks levy.

25 Tom Jackson August 4, 2012 at 10:47 am

Credit Unions: It used to be that you had to be part of their ‘group’ in order to qualify. Teachers, for example, or state government workers. Now, if you are simply a neighbor you may also qualify. Credit unions are not-for-profits, and don’t charge the same hefty fees that big banks do. As a second choice, I’d pick a smaller, nimbler local bank versus one of the big institutions. As long as their ATM network was widespread and free.

26 Jason August 4, 2012 at 10:48 am

credit unions over banks for sure.

I use Charles Schwab, a brokerage firm, and they have been fantastic! In fact we are switching my new fiance over to Charles Schwab also. Free checking and savings that earn really low interest. You have a brokerage account to begin or manage investments, superb customer service, and they refund any atm fees you might accrue.

I highly recommend them!

27 Stefn777 August 4, 2012 at 3:27 pm

Why wait until you move out? I would counsel younger men (13-16 years old) to get a checking account at their parent’s bank/CU and develop the discipline that comes with handling it. Many financial institutions have such “youth accounts”; and Dad (or Mom) can help their gentleman-in-training to avoid the pitfalls that plague twentysomething “dudes”.

28 Andrew K August 4, 2012 at 3:33 pm

When I moved out to Portland, OR, I went with Ally versus a local bank because I wasn’t sure I was going to stay here for a long time, and I didn’t want the hassle of establishing a local bank if I wasn’t sure if I was going to stay here for a long time.

I didn’t close out of the bank my family have used at home, and this is good because now, the family could deposit money in that account and then I could make electronic requests into the new bank knowing it could take a few days on a semi-regular basis.

I still can’t convince my mother that I wouldn’t get to use the money instanteously though.

29 Jeff Jackson August 4, 2012 at 7:19 pm

Agree with Stefn777

My parents stared a joint checking account with me when I was 12. I received $200 a month from my dad for working on his farm. I paid $180 a month in rent, deposited $20 a month into the account, gave 10% of that on charities and saved the rest for what I wanted.

You could say that my parents just paid me an allowance of $18 a month, but the way it worked out, it made me understand the way the real world works at a much younger age.

30 Eric August 4, 2012 at 7:34 pm

Hey Brett/Kate,

I think it’d be really cool as part of this series to also discuss the different types of credit/charge cards out there. There are many different companies that offer a myriad of card choices that can become very confusing very quickly.

The other benefit of an article on this topic is that credit card companies are starting to solicit college age students to get their cards and I’d be willing to bet most (if not all) have no idea what a credit card is or how it actually works.

Thanks for the great content on your site and I look forward to reading every day!

31 Joe August 4, 2012 at 8:17 pm

Great post. This is a life long skill that will serve you well.

32 Rich in NH August 4, 2012 at 10:50 pm

Someone could read this article instead of taking a quarter in High School or Middle School to learn the same thing. I vaguely remember them trying to teach us these basic skills. I still barely balance my checkbook and I think I do pretty well for myself. Imagine what the rest do.


33 Bill August 5, 2012 at 9:23 am

Learn to balance your checkbook with a pencil and paper. Master this skill, then create your OWN spreadsheet (double-checking the math by hand until you’re confident). Then, and only then, should you go to a piece of bookkeeping software.

As Ben Franklin said, “Tell me and I forget. Teach me and I remember. Involve me and I learn.”

34 Allan August 5, 2012 at 11:41 am

Credit unions can have better loan rates and cheaper fees.

But for my primary account I like PNC’s “Virtual Wallet”. It might sound confusing but it give you three different balances.

The ledger balance. Is the traditional balance of everything that has cleared.

Available balance is for transactions that have been submitted but not cleared. Any ATM/Credit charges show up here virtually immiediatly.

Then there is the Free balance. this is the Available balance minus any scheduled bills to be paid, transfers, or checks your wrote that you manually entered into the website.

If you have regular pay dates you can put these into your and the Free balance is only for pending transactions before your next pay date.

35 Andrew August 5, 2012 at 11:44 am

The image of the check that you wrote is disconcerting because of the amount of blank space that you left between the words. It would be too easy, for example, to write “ten” after “hundred”, and when there is a discrepancy between the numerals and the written amount, the written amount takes precedence. As with the digits, always start writing out the amount as far to the left as possible (I push my first word all the way to the left border on the check), capitalize each word and leave little or no space in between them (FiveHundred). Also, write the word “and” vertically instead of horizontally to signal that it’s the end of the dollars and beginning of the fraction.

Regarding Credit Unions: “me too.” Although they do feel more and more like a regular bank every year, whenever I find myself with a charge that I consider unjust, I complain and they quickly reverse it… even after they point out that it was my mistake.

Since banks and credit unions these days pay such pitiful interest, I’ve started thinking of my refunded ATM fees as a legal form of retaliation. Instead of finding an ATM that does not charge a fee, I look for expensive ATMs so my bank/credit union will have to eat the fee, since they’re not willing to pass the money they earn from my (much higher than average) deposits back to me.

I grew up the son of a bank manager, and my father obviously drilled into me the importance of managing your finances from an early age.

Perhaps the biggest lesson I’ve learned over the years is to stay debt-free as much as possible, waiting to make purchases when you acquire the funds. It’s the same net result as earning more than double the money of people who pay the minimum balance on their maxed-out cards every month.

36 Nick Healy August 5, 2012 at 12:12 pm

I agree with you Eric. My first encounter with credit cards was my first week at college where they were signing up students and giving away cheap plastic food containers for those signing up.

37 Jason Paris August 5, 2012 at 2:15 pm

I just want to put in another plug for GnuCash. It has really helped me to get a handle on my finances.

38 Dan Chilek August 5, 2012 at 4:56 pm

This article is very informitive, it really helps me but i had a question you might be able to do an article about. What are the differences between credit unions and banks? what are the pro’s and con’s of each? which do you prefer?

39 J. Delancy August 5, 2012 at 10:32 pm

I feel that the definitive guide to money for those headed to the college student age group is the book “I Will Teach You To Be Rich” and there is also a website. It is loaded with tips, scripts, and exercises to help Millennials navigate through the “gotcha” charges of large corporations. More importantly it teaches a money mindset that anyone just starting out in life should have.

40 Will Russell August 6, 2012 at 9:36 am

Great article. Be very specific about canceling your overdraft protection. When I tried to cancel mine after college, they only canceled it for ATM transactions and not for debit card purchases. Needless to say about 4 months later I paid for something with my debit card and I overdrafted, another fee.

Anyway, now I use my credit card for everything. It requires a lot more self control, but if done properly i.e. budgeting yourself, tracking your expenses and paid off every month, you can take advantage of reward points while not spending any more money than you would with a check book/debit card. Careful though, credit card debt can be a slippery slope.

41 Cameron August 6, 2012 at 11:08 am

The bank I work at has free checking with no strings attached. So does the bank I used to work at. We’re still out there, Art of Manliness :)


42 GlenW August 6, 2012 at 12:46 pm

I am a prefessional banker for a major bank, i.e. I do this stuff everyday. I can say that this advice is pretty much spot on. Bring 2 ID’s to any account opening and know what your Social Security Number is. ID’s such as D/L, passport, credit card, student ID, utility bill. A SS card is not an ID. Oh, and, any opinions I have expressed are not necessarilty those of my employer.

43 Kevin August 8, 2012 at 3:51 pm

with overdraft protection, many credit unions will provide a much friendlier overdraft protection than a bank. My credit union will transfer money for free from my savings a limited number of times a month, provided my other accounts have enough funds to cover the expense.

Its also pretty easy to function without formally balancing a checkbook once a month. I know my typical monthly expenditures and put that amount in the checking account each month. I monitor it once a week to make sure that I’m not overspending. Thats a pretty easy way to keep things ‘on kilter’

44 Nick August 9, 2012 at 8:16 pm

One thing to keep in mind re: debit vs. credit transactions- debit transactions can register as an ATM withdrawal, so if you are only allowed a certain amount of withdrawals per month debit transactions would count towards that limit.

45 csthom October 13, 2012 at 9:57 pm

Great article. It’s easy to keep above water with a checking account, but it’s also easy to screw up. I’m glad they can’t automatically enroll you in “overdraft protection” anymore, but I’m more glad that I can afford to keep a buffer these days. I’m glad to be able to say I haven’t paid an overdraft fee in over two years, but that of course means there was a time when I did.

Of course, I love my bank these days. Non-profit and very customer oriented. My old bank generally seemed not to have time for someone that only had savings and checking accounts.

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