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6 smart reasons to balance your checking account

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@JulieK/Twenty20
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@JulieK/Twenty20
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Balancing your checking account may seem like a chore, but tracking your expenses and knowing your available balance can help you spot fraud, avoid overdrafts and better understand your spending patterns.

The process of balancing your account simply involves listing your debits and credits (deposits and withdrawals), and adding them up to determine your balance. It can be done using pen and paper or money management software.

Here are six reasons why balancing your checking account regularly can help you financially.

1. Reconciling your checking account

Reconciling your checking account means cross-checking all of the transactions in your own records with those of the bank to ensure they match. It can help you to find any mistakes on your part or that of the bank.

Before computers became commonplace, reconciling a checkbook required manual tracking and calculation, but today, banking apps and budgeting software can do all the work — and much more quickly.

Apps like Mint or PocketMoney, for example, can help you track transactions and give you a simple dashboard to use when reconciling your account.

2. Fighting fraud

Another reason to balance your checking account is to check for fraud. If you’re reconciling your account and there’s a difference between the balance you expect to have and the balance your bank says is in your account, it isn’t necessarily a mistake made by the bank.

If fraudsters have access to your account, they may not immediately drain it. Instead, they could siphon off funds slowly enough that you don’t notice. Regularly reconciling your account can help you catch these transfers and put a stop to them.

3. Tracking bank fees

You may be hit with bank fees, such as regular maintenance fees to out-of-network ATM charges. The way banks report fees on statements can make it hard to keep track of some fees. For instance, your bank may report a $20 withdrawal with a $3 associated fee as a $23 withdrawal.

Balancing your checking account helps you see how much you’re truly paying to use the account, which may encourage you to change to an account with fewer fees.

4. Keeping track of your spending

Budgeting requires diligence. It involves building a plan based on your spending habits and then tracking your spending to ensure you stay on course.

Balancing your checking account helps you to track spending because every transaction must be reviewed, which can help you identify areas where you’ve overspent and can cut back.

Tracking your spending is also important when you write checks. If you write a check for $500, the money stays in your account until the check is cashed, which could take several days or weeks or even longer, depending on who the check was made out to. In the meantime, you might forget about it and think you have $500 more than you really do. If you spend that money, your account could become overdrawn once the check is cashed.

5. Catching mistakes made by your bank

Bank errors may be uncommon, but they happen from time to time. Balancing your checking account and monitoring your transactions can help ensure any mistakes are caught and can be fixed.

What’s more, balancing your account can also help you to find and rectify any instances where a merchant has erroneously double-charged you, or billed you the wrong amount for goods or services.

6. Staying up-to-date on automatic payments

Not balancing your checking account regularly can make it easy to forget all of the places your money is going. Reviewing your transactions helps to keep you aware of the things that are impacting your finances and to make changes as you see fit.

For instance, you might see recurring charges for things you no longer use, such as a gym membership, a streaming service or a magazine subscription. Identifying such charges and canceling them gives you more money each month for necessary expenses or to build up an emergency fund.

–Freelance writer TJ Porter contributed to a previous version of this article.

Written by
Karen Bennett
Consumer banking reporter
Karen Bennett is a consumer banking reporter at Bankrate. She uses her finance writing background to help readers learn more about savings and checking accounts, CDs, and other financial matters.
Edited by
Wealth editor