checking

Anatomy of a bank account statement

Fees charged

Make note of all fees listed on your bank statement. They may be listed separately, or included in the chronology of your account's monthly activity.

Common ones are an account maintenance charge, which is a fee you pay for simply having the account, or a nonsufficient funds (NSF) fee, which slams you if you don't have enough money to cover a check. If there's a miscellaneous charge for $10, check the statement for details. If you can't find an explanation, call your branch.

By tracking fees, you'll discover whether your bank is nickel and diming you with charges. If that's the case, make good use of Bankrate's research and find a more cost-effective checking account.

Processing checks and payments

Check the statement to see how your checks are listed. It could be chronologically or by date paid or both. Understanding how checks are listed makes it easier to reconcile the account. Ideally, the bank will list canceled checks in a way that's convenient for you and allows you to quickly see whether your checking account is in order.

Be aware that checks that are processed electronically may show up in a different section of the statement from the checks that were processed as paper throughout the system. If your bank separates ATM and debit card payments, checks that are processed electronically may be grouped with them.

If you occasionally bounce checks, it's a good idea to ask your bank how it processes checks. In the course of a given day, some banks will first process the check for the largest amount rather than processing the one that arrived first that day. Why? If the bank pays the largest checks first, the odds increase that you'll run out of money and the bank will earn a hefty fee if a check bounces. Banks say they do this because larger checks tend to be for more important payments, such as the mortgage or car payment, and the bank figures you don't want those checks bouncing.

Access to your deposits

Also ask the bank about its policy for crediting checks deposited to your account. There are federal guidelines regarding how long banks can hold deposits before giving you access to the money. The bank needs to make sure the check clears, but you don't want the bank holding the check any longer than necessary. For instance, the bank can hold certain checks for five business days. If your check clears in three, there's no reason for the bank to hold it longer than that.

Correcting a mistake

If the bank makes a mistake, send them a letter explaining the situation. We have a sample letter that you can use as a guide when complaining about a deposit error. This sample letter can help when the dispute is about a fee.

Coming up in the next section, we'll look at why financial institutions are so nosy -- and what you can do to protect your privacy.

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David McMillin

Citibank increases checking fees

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