5 tips to protect your checking account

Your checking account is where you keep the money that you are most likely planning to use on a regular basis. If you don't protect that account, you could encounter a number of serious financial problems, ranging from overdraft charges to identity theft and fraud. Learn to protect yourself from these problems with the following five tips.

1. Always know how much money should be in your checking account.

If you aren't fully aware of the amount of money that should be in your checking account at all times then you're opening the door to problems. Someone could steal money out of your account and you wouldn't even realize it until it was too late to do anything about it. You could bounce a check and incur a fee if you aren't sure of your available balance.

In the 21st century, many people don't bother to keep a traditional checkbook that they balance regularly. That's OK, as long as you utilize an alternative method of tracking the exact amount of money in your account.

Such methods include:

• Third-party money tracking sites like Mint.com
• Excel spreadsheets for self-monitoring of spending
• Phone apps for checkbook balancing (such as the Checkbook iPhone app)

2. Always review your monthly statements.

Many people have stopped doing this since they began receiving electronic statements instead of paper statements especially if they use an online savings account and checking account program. It's important to resume the habit of going line-by-line through your monthly statement to make sure that all transactions are accurate. This practice will also give you a good idea of where your money goes each month--the first step to starting a budget if you don't already have one.

3. Never write a check if you don't have enough money in your account.

This sounds obvious, but many people do it anyway. The problem is especially common among older adults who are used to the way that checks were processed in the past. Checks used to be sent manually from one business to another, so it could take several days for a payment to process.

Nowadays, checks are handled electronically thanks to a 2003 federal law known as the Check 21 Act. This law allows for quick and easy electronic money transfers that process much faster than in the past. This means that moments after you hand over a check, the money can be taken from your account. If you don't have the money in your account to cover the immediate processing of a check, then don't write the check.

4. Protect your checking account information.

Most people would never give out their savings account number and yet regularly provide their checking account numbers to businesses that seek to do direct deposits or automatic withdrawals from the account. Only give out your bank routing number and account number to businesses that you have worked with in the past and know are legitimate. Watch the transactions carefully for any errors.

5. Know your rights and take advantage of them.

The Electronic Fund Transfer Act (EFTA) protects you in case you have problems with an electronic fund transfer or a debit account issue. Make sure that you study up on laws like this and utilize them as needed when problems do arise with your checking account.

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