In this issue we are going to look at:

01.  Why is it important to reconcile my checkbook?
02.  What happens if I write a check and there is not enough money to cover it?
03.  I wrote a check yesterday and the money has not been taken out of my account.
04.  How do I balance my checkbook?
05.  What is a bank statement and what is included in it?
06.  Why is it important to reconcile my bank statement?
07.  7.How do I know if my account is interest bearing?
08.  What are outstanding checks & "cut-off" date?
09.  What do I need when reconciling my bank statement?
10.  What are the steps in reconciling your bank statement?

1. Why is it important to reconcile my checkbook??

Nowadays a lot of transactions are made by using checks, debit cards or credit cards. Creditors keep a copy of how much you spend when using their cards and they have what is called a maximum balance. In other words, when you spend the maximum on your credit card, you will not be able to spend anymore.

You will be "declined". When writing a check, you will not be declined because the money is coming out of your checking account. Since a check is not processed immediately and typically takes about 3 days for the money to be withdrawn from your account.

2. What happens if I write a check and there is not enough money to cover it?

It all depends on your bank and who you wrote the check to. Some banks will cover the check and charge you a fee, plus the amount of the check. Other banks will send the check back labeled NSF. NSF stands for insufficient funds. Most stores have policies on "bad checks"; usually there is a fee that they charge you, however the consequences can be worse.

Typically, if it is a one-time mistake most creditors will charge a fee and require payment, whereas if it has happened repeatedly further action can be taken.

3. I wrote a check yesterday and the money has not been taken out of my account.

Checks usually take 3 days to clear. Even though the money has not been taken out of your account immediately, do not spend it because when the check is deposited you will need the money to cover it.

4. How do I balance my checkbook?

1. Add to your checkbook register all deposits on your bank statement. Do not forget to add direct deposits or interest that you have earned from your checking account.

2. Now add all withdrawals. Remember to add ATM fees, account maintenance fees and automatic payments.

3. Finally calculate the current balance of your checkbook as of the last transaction you made.

5. What is a bank statement and what is included in it?

A bank statement is a summary of all your transactions. It includes balances, deposits, cancelled checks, NSF fees, bank charges and fees and any ATM activity.

6. Why is it important to reconcile my bank statement?

There are a number of reasons why it is imperative for you to reconcile your bank statement every month. The first and most important is you can catch any mistakes that your bank may have made. Banks do make mistakes.

A clear example of a mistake made by a bank is depositing your check into someone else's account. Most of the time the account holder's account that your money has been deposited into is not going to complain so you need to bring it to the bank's attention immediately. Always keep a record of the deposit slip.

The second reason is it helps you find any mistake that you may have made. You may have forgotten to write down a payment in your check register at the time you made the payment. Finally it gives you better knowledge of your current balance. You know exactly what money has come in and what money has gone out. If you are trying to save money, this is a perfect time to look over your expenditures and figure out how to save.

7.How do I know if my account is interest bearing?

To find out if your account is interest bearing you will need to look in the account summary section of your bank statement. If your account is interest bearing then you will see the amount of interest in that section of your statement.

8.What are outstanding checks & "cut-off" date?

Out standing checks are checks that have been written but have not cleared the bank by the time you receive your statement. Cut-Off" date is the time when your statement is being mailed to you. In other words, your bank summarizes your account, prints it and mails you a copy. While your statement is in the mail and until the time you receive it, you may have spent more money and that is what is referred to as the "cut off" date.

9.What do I need when reconciling my bank statement?

There are a couple things that need to be put together before reconciling your bank statement. Below are 4 steps to take.


• 1. Take all cancelled checks and put them in numerical order.
• 2. List any outstanding checks.
• 3. List all deposits that have not been recorded by the bank.
• 4. Include any bank fees that you may have been charged.

10.What are the steps in reconciling your bank statement?

First use your bank statement to update your checkbook. Include anything you may have forgotten to include in the past.

Next go through your checkbook and mark all checks paid and deposits credited.

Attached I have made a couple tables that should help you through the steps of reconciling your bank statement and check book.

Remember to do it monthly. Most banks have a form included with your bank statement. Good luck!

Click Here to Print Our steps to reconciling your bank statement!

Newsletter 04
Rev.1
April, 2005