5 common mistakes you’re making with your checking account

A checking account and debit card are two of the best tools you can have for managing your money. But how you use them matters.

“Checking accounts help you keep better track of what you spend,” says Alexander Lowry, executive director of the Master of Science in Financial Analysis Program at Gordon College in Wenham, Massachusetts. “When you’re recording debit and checking purchases, you’re more conscious of where your money is going.”

Sounds easy enough, but depending on how you use your checking account, you could be shortchanging yourself—without even realizing it.

What are some checking account mistakes to avoid? To answer that, here’s a rundown of the most common mistakes you’re making with your checking account:

1. Treating your checking account like a savings account

Checking accounts are typically used for everyday spending and paying bills. A savings account is your go-to for working toward short- and long-term financial goals. Confusing the two tops the list of checking account mistakes that should be avoided.

If your checking account is your most-used bank account, it may be tempting to stash some savings there as well. But Andrew Rombach, a contributing editor at LendEDU, says there are three reasons to keep your savings in a separate savings account:

• Interest: “You generally won’t earn interest on your checking balance, so you’re leaving money on the table,” Rombach says. Instead, consider moving your savings to a high-yield savings account.
• Security: While funds you need to access regularly for day-to-day spending are parked in your checking account, you may want funds for anything else (think your emergency fund or long-term savings) in a separate account for security. “Your money could be more vulnerable to scammers [in a checking account], since you’re swiping your debit card for purchases,” Rombach says.
• Accountability: “You’re more likely to spend extra money if it isn’t tucked away in savings,” Rombach says. The more money you see as “available” in your checking account, the more you’re likely to spend—regardless of whether you’ve earmarked it as “savings” in your budget.

2. Sticking with a high-fee checking account

The average adult has had the same primary checking account for about 16 years, according to a survey conducted for personal finance websites Bankrate and MONEY.

There’s a lot to be said for being loyal, but it can backfire if another of the common mistakes you’re making with your checking account is paying too much in fees. That can include fees for monthly maintenance, ATM withdrawals and overdrafts.

Making the switch to a more fee-friendly (or even better, no-fee) bank can help you avoid checking account fees and save you money, and it doesn’t have to be a headache.

“The ability to link and transfer money between accounts makes switching banks relatively hassle-free these days,” says Megan Robinson, financial coach and founder of personal finance blog Goodbye to Broke. If this checking account mistake to avoid is all too familiar, she recommends online banks for low- and no-fee checking accounts.

“Look for an account with no minimum balance, no monthly fee and the ability to link your savings to checking for overdraft protection,” Robinson says. “Bonus points if your new checking account comes with a debit card rewards program.”

While those are less common, there are banks that offer rewards for debit card purchases. Discover Cashback Debit offers 1% cash back on up to $3,000 in debit card purchases each month.¹

3. Skipping text and email alerts

Text and email banking alerts are a convenient way to keep tabs on your finances. Not using them also lands on the list of checking account mistakes that should be avoided.

“If you don’t use these alerts, you run the risk of losing track of your money,” Rombach of LendEDU says. That could leave you short when you need cash in a pinch—or worse, put you at risk of overdrawing your account and incurring an overdraft fee.

Text and email alerts can also clue you in to potential suspicious activity, Rombach adds. Setting up an alert each time a new debit transaction posts to your checking account, for instance, can tip you off if someone makes a fraudulent charge using your debit card.

4. Failing to protect your account when shopping online

Online shopping is convenient, but being careless with your debit card number is a checking account mistake to avoid because it could make the money in your account more vulnerable to fraud.

“If you’re using your debit card, don’t save your information at any website, and look for ‘s’ after http [in the site’s URL] to make sure the site is encrypted,” Lowry, from Gordon College, says.

Paying with your debit card through apps from unverified sources and using public Wi-Fi are additional checking account mistakes that should be avoided when shopping online. Robinson suggests using a secure third-party payment app to pay for purchases online, instead of giving a merchant your debit card information directly.

“That way, when you make a purchase, the recipient doesn’t receive your personal financial information,” she says.

5. Forgetting to keep a buffer

While keeping too much money in your checking account could mean losing out on interest earnings, cutting your balance too close to zero is a checking account mistake that should be avoided. In that case, even a small purchase could put your account in the negative and trigger an overdraft fee.

Robinson says a reason to keep at least $100 in your checking account is to protect against overdrafting. Another option is to link your checking account to your savings account and sign up for your bank’s overdraft protection. If you overdraw your checking account and have overdraft protection, your bank will automatically transfer money from savings to cover the transaction.

Even if you have overdraft protection, there are still checking account mistakes to avoid. You’ll still want to monitor your spending carefully, for example, to avoid letting a low balance put you in the danger zone. If you end up overdrawing your checking account too often, overdraft transfers could quickly drain your savings. Your bank could also charge a fee each time it makes a transfer on your behalf.

Rethink how you manage your checking account

Avoiding common mistakes you’re making with your checking account can improve your financial health. It’s easier to build savings when your spending is under control, which is important if you’re working toward some big financial goals. Knowing which checking account mistakes to avoid can ensure you’re managing your bank accounts to match your needs.

¹ ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo^® and PayPal^™, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries. Venmo and PayPal are registered trademarks of PayPal, Inc.