9 Common Mistakes You're Making With Your Checking Account

Most of us think about our checking account in only one way: Is there enough money in it? While that's certainly the most important piece of the puzzle, there are plenty of other things to consider to ensure that you're getting all the bangs for your bucks. Beware of these common, costly mistakes you might be making with your checking account.

1. Maintaining a lower balance than you need to cover your expenses

Your top concern regarding your checking account should always be that you have enough money in there to cover your expenses — even more so if you subscribe to direct deposit and/or autopay services. By engaging in the latter, you're essentially putting machines in charge of your finances, which, while convenient, are not always accurate. If you don't have enough money to cover your bills, you know what happens — you dip into the negative and you're slapped with insufficient funds or overdraft charges, further dragging you into the red. This oversight also can affect your credit score if you miss the payment for 30 days or more. (See also: The Pros and Cons of Autopay)

The best you can do for yourself is to commit to keeping your bills covered by your checking account and staying on top of your auto-deposit payments to maintain a positive and accurate balance.

2. Keeping more money than you need in your checking account

Keeping enough money in your checking account to cover your expenses should be your main focus, but you also may be doing yourself a disservice by keeping too much money in that account. It's a balancing act, for sure — but if your surplus can benefit you someplace other than your checking account, you need to move it.

Says Michael Banks, founder of personal finance blog The Fortunate Investor, "Money that sits in a checking account accumulates very little in interest. [Some banks], however, offer investor checking accounts that allow you to invest your checking account funds to maximize growth. You don't need to invest all of your money, and it's easy to keep two accounts and transfer as much into your investing account as you feel comfortable with; but the more you invest the more you stand to gain in the long run."

If the idea of an "investment" account gives you anxiety, then consider opening a Roth IRA or at least finding a high-yield savings account instead.

3. Limiting your access to in-network ATMs

When I first moved to Manhattan, there were only a handful of my bank's in-network ATMs on the entire island, none of which were near my apartment. I was never close enough to one when I needed cash, so the fees added up quickly (some out-of-network ATMs charged up to $5 per transaction). This went on for a few months before I wised up, did my research on the most abundant ATM locations in New York City, and switched banks. If you're banking someplace and the ATM locations are prohibitive to you, consider banking elsewhere; you could save a bundle in time and fees. (See also: 8 Ways to Make Sure You Never Pay an ATM Fee)

4. Paying fees just to have a checking account at a particular institution

Some banks charge a monthly checking account fee if you don't keep a minimum balance in it — say $1,500, for example. If you don't like keeping excess funds in your checking account, it does not make sense to pay a premium to bank with an institution that charges you for moving money around. Another option you have is opening a free checking account at a credit union.

According to a 2016 Bankrate survey, 76 percent of credit unions offer free checking accounts. This is good news in a time when free checking at banks continues to decline almost every year. The survey also noted that an additional 22 percent of credit unions are willing to waive their monthly fee for meeting certain requirements such as signing up for direct deposit or paperless statements. (See also: Are You Paying These 6 Unfair Banking Fees?)

5. Spending without checking your balance

Do you know exactly how much money is in your checking account right now? What about a close estimate? If the answer is no, you're not staying on top of your money well enough — and you definitely shouldn't be pulling out your debit card when your balance is in flux. Before you make a purchase that you even think could compromise your balance, log into your account (easy to do with your mobile app; I log into mine with a fingerprint), and manage your money wisely.

6. Ignoring your transaction history

You need to stay on top of what payments are being deducted from your checking account, even if they haven't actually been deducted yet. Continuing to spend when payments are pending could spell disaster.

"Check your account every couple of days to ensure transactions have been posted," advises Natasha Rachel Smith, personal finance expert at TopCashback. "Be aware of holds on your account as a result of a retailer or merchant requesting authorization of a purchase. For example, gas stations and hotels could put a hold on your account until the actual transaction clears, so be mindful of these transactions when viewing your available funds. I also recommend checking on your transactions for fraudulent charges and reporting them as soon as possible."

7. Not subscribing to overdraft protection

Banks typically charge a $35 overdraft fee, and it's important to keep that in mind when you know your checking account is getting low. You also should fortify your account with overdraft protection if it makes sense for you. (See also: 9 Ways to Avoid Overdraft Charges)

"Although opting out of overdraft protection can be ideal to not get hit with overdraft fees on debit card purchases, your bank can still charge you non-sufficient funds fee for checks and bill payments that can be comparable to an overdraft fee," Smith explains. "It is ideal to opt out of overdraft protection when you have a savings account with the same bank. Typically, if you have both, the overdraft fee is less. If you choose to opt in to overdraft protection, always be cautious so you avoid the charge."

8. Assuming that every debit charge is legit

Once a week I go through my checking accounts to make sure all the debit charges are legit. There have been a few occasions where I've noticed an error — a fraudulent charge, a subscription I canceled, an incorrect amount charged for an expense that I authorized, or a price hike in my existing memberships. If I didn't do my due diligence and address these errors, nobody else would have. Check in on your money to make sure the numbers are correct.

9. Linking to online retailers you know nothing about

It's becoming more and more common — especially around the holidays — for shoppers' financial information to be compromised by a security breach. I'm not going to tell you to stop shopping online altogether, because that's just impractical, but I will urge you to be more responsible in where you spend your money and save your banking information.

First, make sure the website is secure. The "https://" distinction designates a secure site, opposed to the more common "http://" protocol identifier for sites that don't require any user information.

Second, use common sense. While it's not impossible for well-known retailers with an arsenal of security resources to get hacked, it's much more likely to happen to the small-potatoes shops that can't afford top notch security. Of course, these smaller retailers don't have as much to offer hackers in the way of identity theft. But in any case, use your best judgment when providing your financial info online to prevent being a victim. (See also: 5 Dangers of Mobile Banking — And How to Avoid Them)

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