“I look at a checking account as the starting point of how your finances flow,” says R.J. Weiss, founder of The Ways To Wealth, a financial planning website. “Money comes into your checking account, and after that, you decide where the money goes.”
While a checking account can be a significant and simple component of your personal finances, that simplicity can also lead to your complacency. Case in point: When’s the last time you considered—what are some ways that I can better manage my checking account? If it’s been a while, you could be missing out on time- and money-saving features.
Instead of sitting on the sidelines, Weiss says proactive management can help you get the most benefits from your account. To switch from idle to proactive, consider these seven tips to manage your checking account wisely:
1. Use automation
One of the easiest ways to manage your checking account and save time is to automate your finances. Consider setting up a direct deposit with your employer so your paycheck lands right in your checking account and is ready to go. You may be able to set up automatic transfers from checking to savings, which can help you save for important goals without having to remember each month or paycheck (bonus: you also won’t be tempted to splurge instead of save). Another tip to manage your checking account is to set up bill pay so your monthly bills are paid from your account automatically.
“The online bill pay function saves you from having to write out checks, pay for postage and take the time to mail the check,” says Ryan Inman, a financial planner for physicians.
Since some companies charge processing fees for credit card payments, Inman says you may be able to save money if you send bill payments from your checking account or have the company withdraw the money from your account directly.
2. Know your balance
“Whether you’re setting alerts with a budgeting software or using the bank’s app, you always want to have an idea of how much money you have in your account,” Weiss says. You can also check in on your balance and manage your checking account by logging into your account online or visiting an ATM.
Knowing how much money you have available will make it easier to plan for upcoming bills, avoid fees and better monitor your budget and spending.
While keeping close tabs on your balance is a way to manage your checking account, it’s also a way to protect your account. An unsuspected drop in your balance or suspicious activity could be an indication of fraud. Quickly reporting potentially fraudulent activity to your bank could help limit your liability and secure your account against additional theft.
3. Explore the mobile app
Another one of Weiss’s tips to manage your checking account is to get familiar with your bank’s mobile app.
In addition to letting you check your balance while you’re on the go, the mobile app can help you manage your checking account by letting you deposit checks, review account activity and pay bills.
“I look at a checking account as the starting point of how your finances flow. Money comes into your checking account, and after that, you decide where the money goes.”
4. Embrace potential earnings
Getting extra money deposited into your account could make it easier to manage your checking account and budget because you’ll have additional money to spend or save. While checking accounts are a great place to park your everyday funds, some banks offer opportunities to earn interest or rewards. Discover Cashback Debit lets you earn 1% cash back on up to $3,000 in debit card purchases each month.1
“1% cash back rivals what you can get on a credit card,” Inman says.
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5. Avoid fees
Inman and Weiss both shared ways to manage your checking account that will be helpful if you’re also interested in how to avoid bank fees. One of the simplest is to have an account that doesn’t charge a monthly maintenance fee, regardless of your account balance or account activity.
Your bank could also charge a fee when you use your connected debit card to withdraw cash from certain types of ATMs. Inman recommends knowing which ATMs you can withdraw cash from without paying a fee and using these no-fee ATMs as much as possible as a way to manage your checking account better.
If you’re thinking about tips to manage your checking account, know that overdrafting—when a transaction brings your account balance below zero—can lead to fees.
“It’s good to know the terms if you might overdraft on your account,” Weiss says.
To manage your checking account like a pro, you should also be aware of fees associated with ordering checks, sending wires and stopping payments.
6. Consider consolidating
Inman says many of his clients have multiple checking accounts when they first meet with him.
“Consolidating and simplifying your finances so you have just one main checking account can make it easier to monitor your finances,” he says. “You can quickly see how much money you have, when it comes in and where it goes.”
For some, tracking your money could be more difficult and time consuming if you’re managing too many checking accounts. You’ll have to remember login information for multiple accounts, keep track of different balances and remember which account you use for which bills. Plus, it may be easier to avoid potential fees for just one account.
7. Decide where to keep extra money
If you manage your checking account well it can be a great place to store money for everyday spending—think entertainment, food and transportation-related expenses—as well as regular monthly bills. But a different type of bank account could be a better fit for intermediate- and long-term savings.
“You want the money in your checking account to have a purpose,” Weiss says, “otherwise, move it to an account that earns higher interest.”
For intermediate-term goals, an online savings account or certificate of deposit (CD) could be a good fit. Tax-advantaged accounts may offer benefits if you’re saving for long-term goals, such as your retirement or a child’s college education.
Create a system that works for you to better manage your checking account
As you’re thinking about new ways to manage your checking account, consider your current process and what you could be doing differently. Whether you have to change old habits, close accounts or open a new one, you can create a system that works for you and your finances.
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.