Balancing your bank account will help you make sure there is enough money in your account to cover all of your checks and withdrawals. You might find mistakes that were made by both you and the bank. If you receive paper statements from your bank, there is usually a form on the back to use to balance your account. If not, use the following steps to verify your records are correct:
- Go through your bank statement and put a checkmark next to all transactions that are recorded in your checkbook register.
- Make note of the transactions that are on your bank statement, but are not in your checkbook register. Enter these transactions to your checkbook register. Add or subtract the transactions as indicated on the bank statement from the account balance in the register.
- Find your ending account balance on your bank statement and write it on a sheet of paper.
- Find any deposits that you made after the bank statement was generated. Add them to your account balance on the piece of paper. Make a note of the new balance.
- Find any checks that have not cleared your account (ones that are listed in your register but weren't shown on your statement). Subtract them from the new balance on the piece of paper. The resulting figure is your ending balance.
- The ending balance on the piece of paper should be equal to the balance you recorded in your checkbook register. If they are not equal, your checkbook is out of balance.
If your checkbook balance is high:
- Make sure you entered all ATM and other electronic transactions in your register.
- Make sure all checks are recorded. Each check is numbered. Look again at the bank statement. Go through the checks in order to find them all.
- Make sure you record any bank service charges in your checkbook register.
If your checkbook balance is low:
- Make sure you recorded all of your deposits.
- Do all of the transaction amounts written in your register match the amounts on the bank statement? Contact the bank if you think they made an error. Correct your register if you made an error.
If you made a mistake balancing your account last month, it will be carried over to this month. If you can't figure out why your register doesn't match the bank, it's safer to go with the bank's balance after you've made adjustments for items not included on the statement. That way, you can avoid overdrawing your account.
Your checkbook register
Your checkbook register is a permanent record of your account transactions. You need to keep track of deposits (cash in) and withdrawals (cash out). Calculate the balance so you know how much money you have available to spend. Your bank is tracking your transactions too. Your goal is to make sure that you and the bank are in agreement.
Your bank statement
Every month you will receive a bank statement by U.S. Mail or by e-mail. It is an official record of the transactions processed on your account. The statement will help you balance your checking account and detect any errors.
Overdrawing Your Account
If you write a check and don't have money in your account to cover it, your account will be overdrawn for non-sufficient funds (NSF). You will be charged a fee by your bank - sometimes as much as $35 - and the bad check (or bounced check) will be noted on your credit report. The person or company that received your bad check might ask you to pay your bill in cash. They might also ask you to reimburse them for any charges they incurred as a result of your bad check. Bouncing checks can be very expensive.
When your account is balanced, you are less likely to bounce checks because you know the value of your account balance at all times.
If you owe money to a bank because of an overdrawn account, you can get a free copy of your Chexsystems report by going to their website.