How To Start Using Your Checking Account Properly | The Financial Diet
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- čas přidán 28. 07. 2024
- Chelsea and Lauren talk about using your checking account the right way. Want even more banking tips? Check out this video: • 5 Things Smart People ... .
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ive just started my first 'official' job and ive basically gone through your entire blog to make sure im doing this whole personal finance thing right LOL! thank you !
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As a Personal Banker, usually I like to encourage my clients to ONLY use their checking account for bill payments. The reason for this is because if you are spending out of your checking account for fun stuff, like restaurants or partying, you are using the cash you should be putting towards your bill payments. This is usually how most of my customers overdraw their accounts.
Credit cards are typically the best way to spend on things outside of bills, as long as you have the discipline to not overspend on your credit card.
P Rao so would you have more money in your checking account? For the required bills and the money that you use to pay off your credit card?
SiLeNt LvEdREAMER I think p rao is more saying, use your checking account for bills or holding the money for your bills and using the credit card to get the benefits of the card, ig rewards, cash back, etc. Then pay off your credit card when all the bills have cleared before the due date from the checking.
Ethan Shipley ok? I was addressing the other reply. Also, what p rao said is going to apply to those has both a checking and credit card and of course that isn't everyone. If you have a job or get money now you may want to get a checking, it's a good start point but often you will need a person over 18 or 21 to be a cosigner until you are an adult. If you don't get a steady pay source and know you will not use the account, wait until you need it.
Wow strange way, I always have way more money in my checking out than I ever spend so I've never overdrafted, I've come close but only because I was to lazy to pull extra money out of savings and I also knew that I have overdraft protection (because my savings is linked it just automatically pulls from my savings) and I also calculated it before I made the purchase that took my checking account down to $12 and I already knew before I swiped that I had enough in there and there wouldn't be any auto pulling from my savings. Do people not know how much is in their account at all times? Like right now I know my savings currently (with a US bank, I obviously have much more money in a foreign bank) has a little over 3k and I also know my checking has a little over 800 and I also know my credit card balance is -$0.01. Yep I accidentally paid an extra penny I'm an idiot.
+Senan sounds complicated, I'll stick with paying my bills with checking, using my credit for non bills and paying it down to 0 every night. I never overdraft, I don't spend enough to overdraft and I dont understand how one could overdraft, seems like a bit of task.
Great video. Would you be able to make one about different types of savings accounts and how to use them? Or maybe even a series? Thank you so much!
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Great video (I found you all via vlogbrothers). I've worked in banking for 10 years and wanted to mention one thing from this video. You mentioned that in general, banks do not report checking accounts on your credit bureau (but instead, report your delinquent history, if present, via ChexSystems).
Though this is true, banks WILL report an overdrawn account to a collections agency depending on the amount of the overdraft. Should this happen, it will absolutely appear on your credit report. In general, banks only submit an account if they lose money (meaning, in general, that a check was paid overdrawing the account), but not if the overdraft is only due to fees.
To also mention - not all banks use ChexSystems, and other entities DO use ChexSystems (such as grocery stores and check cashing businesses). Some various banks use other systems - but all banks will verify some system to see how your checking history stacks up. Should you have had a delinquency in your past, make sure to clear it up (paying it off as possible) and then have the bank who reported that delinquency remove it accordingly. Having delinquencies may prevent you from opening new accounts.
Thanks for the video and great information!
I'd like to point out that checking accounts actually CAN affect credit! Not necessarily WILL, but CAN. I am a personal banker at a large west coast bank. Here are some of the ways your checking account can affect your credit:
+ Some financial institutions will ping your credit when opening a checking account to present you with convenient "lending offers". Similar to how stores like Marshalls will offer you a credit card at the register, some banks opt to ping your credit to see if your score and history are decent enough to offer you one of their credit cards or credit lines.
+ Your credit can be affected if your checking account is "charged off". A charge off occurs when a checking account is force-closed by a bank against your will due to insufficient funds, typically due to the size of the overdraft or the length of time you've been in overdraft. A charge off means that the account has been deemed uncollectable and the debt has been sold off to a collection agency.
Why would the offer me to get a credit card with no credit history though? They were practically begging that I get one, unfortunately for them the reason I don't have a credit history is because I'm so good with money I've never needed one. So theyre taking a loss with me. They're literally paying me to use their card, I mean I'll take it but I think theyre crazy. I should be the type of person you don't want to have a rewards credit card because you'll never be able to get interest out of me.
I just thought of a question that has become pretty important to me in the last few months:
How do you budget when you are a college student who doesn't have an income currently? And how much should I really be spending?
Pretty old question but still thought to answer. If you are a college student like me, you must have some sort of income or way to pay the bills, even if it's your parents and you dont actually see the bills because you live with them or because they pay for them. I myself live with my parents while attending university and have a low income job as well. 40% of my pay i save into an account and the rest it's for stuff for myself that i wont ask my parents to buy like cellphones, room improvements, books, transportation, my dog's food, and for when i go out and other stuff. I also try to buy groceries for the house from time to time. The idea is to help even if its a little bit, or at least make my expenses not be a part of theirs anymore.
If you dont have an income at all but still have expenses make a budget, in an excel spreadsheet you can create categories of expenses, like food, fun, house and bills for example, and you put your expenses in them to see how much you spend. From there you could try to see where you can cut some expenses out. If you have a card it's pretty easy to do since most banks allow you to download an excel with your money movements, you only have to put them in the right category to see how much you spend in each. I have an excel that is way more advanced, has categories and subcategories and i put my debit and credit card expenses in it. I only wish i had started the excel sooner because i was a hoarder of money in my debit card before and that way you just cant see the money you have to spend, the one you have to save or if you have passed the limits you set on yourself.
Even if my answer came waaaay too late i hope you have gotten better with money in the year that passed.
if I cannot have a saving account, where should i invest my income
I just learned that postdated check c be cashed out anytime, if maybe its not more than sis months ahead of the indicated date. so its really important to have some allowance in your checking account to prevent penalty if in case your recipient just decided to cash it ahead of the date indicated.
How do you ladies feel about the Aspiration- online bank?
advice I would add is that you may be able to set it up so you can get a notification from your bank when your checking account balance goes under an amount that you choose. I have mine set too notify me via email when I go under $60, because I almost never spend more than that at one time, and I haven't overdrawn since then!
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I recently did this as I don't have a planned overdraft and it has saved me to so much money!
oddrey52 This.
oddrey52 Yes!! Also be aware of the timing for the alerts, as some are not in real time
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LOVE the new hair!
Can you make a video of how to save for and buy a car, and how to plan for car payments?
pay cash for it... you won't have any payments
You need a good down payment and the rest in amounts you can actually month to month. Look for offers with no interest (there should be some), and save a lot for the down payment, the more it is the less the interest and the less you'll have to worry about paying it month to month.
Do credit unions
Its amazing how little people pay attention to their checking accounts. I have many friends who refuse to look at their account and just keep spending. I made sure that my bank was very good about overdraft. Mine will just take the money out of your savings and doesn't charge you a fee.
If you don't mind me asking, which bank has this overdraft policy?
I saw several banks near here that did it but I bank with Redstone Federal Credit Union. Unfortunately this bank is only located in Northern Alabama.
Junghwa This is a pretty common policy at credit unions. I have Patelco in California and money will be moved from my savings or overdraft account. If it's the latter, I have until the end of the month to make a minimum payment (based on debt to income ratio). It functions similar to a credit account and is helping me rebuild my shitty credit score.
Junghwa This is a pretty common policy at credit unions. I have Patelco in California and money will be moved from my savings or overdraft account. If it's the latter, I have until the end of the month to make a minimum payment (based on debt to income ratio). It functions similar to a credit account and is helping me rebuild my shitty credit score.
Junghwa This is a pretty common policy at credit unions. I have Patelco in California and money will be moved from my savings or overdraft account. If it's the latter, I have until the end of the month to make a minimum payment (based on debt to income ratio). It functions similar to a credit account and is helping me rebuild my shitty credit score.
Definitely should add that "overdraft protection" is deceptive as hell. Each bank is different but usually signing up for it means that it "protects" you from getting declined when you don't have enough in your account for say an emergency purchase. It *lets* you overdraft... it sounds like its protecting you from over drafting but its actually the complete opposite. then charges you some fee (usually around $30). So that means if you don't sign up then it makes it harder for you to overdraft your account. (Which is good!) The only times you could then basically would be if you ran your card as a credit or when buying gas... stuff like that that can take 3 business days to appear in your account anyways. Any time youre not putting in your pin usually. Imo... you should never sign up for it, especially if its your first time having a bank account. Its a good way to overdraft and owe the bank even potentially hundreds of dollars over an overdraft of $10 you couldn't afford to pay back until the next payday. Which of course usually means abandoning the account... it goes to collections... its just a mess. Wells fargo for example is particularly known for screwing their customers like that. I believe they even got sued for it.
Kathryn Blowers Great point. I also suggest looking into your deposit account agreement, the booklet they give you when opening the account, in regards to overdraft coverage and overdraft protection the differences, and what is the timeframe for an overdraft for your bank. Knowing the rules is the first way to avoid extra fees.
Great video! I appreciated the topic. I also wanted to drop a quick note that not everyone has access to checking account due to various reasons. Maybe a future topic for a video could cover either the costs of poverty/being financially disenfranchised by the banking system or how class effects your relationship to capital/banking/assests, etc. That might be a good way for the channel to be a little more inclusive and give voice to people who need more than a change of habit to enter mainstream financial culture.
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Ahhhh thank you so much I just got a checking account and debit card yesterday!!!
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Izzy-Fizz I LOVE THAT THIS IS A THING NOW
+Katy Cunningham ME TOO- it's so.. Apt!!!
Do you shred a check after taking a picture of it? I'm so paranoid I only deposit them in person, usually in the drive-thru. But I don't drop them in the ATM
(Hi I worked at a bank) Generally we recommended keeping them for 30 days just in case there was a problem, but then yes, you can shred them. We also recommended writing the date you deposited the check at the top, to let you know when it's past that 30 day mark, and also to remove confusion about whether or not you already deposited it.
how do I choose a bank for a checking account vs. credit card vs. savings account?
i didn't know you could overdraft your account. i don't think it's possible here in my country.
what country?
In my country is not either. You can only do that with credit cards here in Chile.
America is weird.
They said went over zero don’t they mean under zero at around 2:00 to 2:12
Thanks for talking about this! Banking basics are so simple but many of us look over it and don't pay attention because they think it's not a big deal. It Is!
I'm surprised you didn't mention why you should keep money in a saving account instead of in a checking account?
I've heard it's to keep you from loosing access to your money if someone steals a check or debit card ?
Savings accounts generally have much higher interest rates, so I think they were addressing both savings and specialty accounts when saying that keeping most of your money in those will make you more money. That's how I read this video and makes sense with my banking experience.
You can maybe get 1% now a days though at the best, savings accounts are a real let down compared to what they used to be. Still, I guess 1% is better than nothing....
On the other hand though, if you have $5k savings for your 6 months expenses, thats only $50 a year, honestly I think it might be worth that just to not have to worry about over drafting....
The difference between the rates on every bank's checking and savings accounts are going to be different, and also variable. And even $50/year means something different to people based on spending habits. I keep enough in my checking that I know I won't overdraw, then the bulk in my savings, and my IRA is limited in how much I can put in a year, so I put in the maximum. So I have more than 6 months' expenses in savings, but that's my personal circumstances that I can't expect them to address.
ArtichokeHunter if I were you I'd take that extra money over your 6 month fund into additional investments
Good tips--I really need to stop hoarding unnecessarily into my checking account;;; When y'all say "leave one paycheck's worth of money" does that mean about one month's? My salary is on a two week cycle so curious if I should leave 1 or 2 "paychecks"
She says to keep a 30 day cusion which is the equivalent of a month of take home pay
I would say a weeks worth of pay is sufficient. Thats what I do anyways, but I also spend a lot less than the average person.
Am I the only one who looks at their checking and savings account at the same bank as one huge account instead of two separate ones?? I put majority of my money in my savings because interest who the hell doesnt want to collect on that interest with money just sitting there waiting to be used and also I can very easily dump 1-2k dollars into my checking account no problem within seconds on my phone. I usually never keep over 2k in my checking account because I can do up to 6 transaction and if I need 5k in a dime I can transfer it from my savings just like that. Not sure why I would need 5k on a dime, but if I do, no worries, the money is very accessible in my savings account.
Credit unions are the best things to have to save on all your checking fees!
What checking fees? Like seriosuly? Just have around 5k at all time in your checking and saving and you ll never get a fee.
Request that your debit card have NO overdraft limit - this is where the bank, as a "courtesy", will authorize a transaction that exceeds your actual balance but will charge the standard OD fee. Better to have the card declined than rack up $$$ fees
Great idea Lisa, I highly suggest anyone thinking no overdraft limit is all they need to know banks have what is called overdraft coverage. This is them giving you an option to not overdraft, but it often has a loop hole based on how merchants bill your check card.You can get info on this in booklet you got opening the account, or getting a recent copy of the booklet from the bank, or often on the banks website.
Anyone forced to watch this for their school? Oh.. no just me..? Ok.. 😃
Me Too bruh
same lmao
same
My finance teacher always yellin at us too 👊🏻😭
I watched this because I want to, I want to learn and I am looking forward on having a checking account maybe 6 months from now..
Chelsea, it's both funny and encouraging to hear about your financial missteps and realize how far you've come since then. I'm generally pretty good about money, but I think it's very encouraging to see a person bounce back from what sounded like a toxic relationship with money, and realize that there is hope for people who struggle with money.
& read each page of contract! We 'said' we didn't want overdraft protection....but on the contract the option was electronically checked & the page didn't have a signature...only the last page required a signature. READREADREAD!!!!
You see that? DREAD!! :)
With student loans and other expenses, I can't even imagine having 6 months worth of money saved up in an emergency fund 😳
Seriously how does someone keep an entire check's amount in their checking account at all times???
Chelsea Shurmantine by saving up for it 😐. That is usually how people end up with a large amount of money.
A good way to save for an emergency fund, I read from another comment, is to just save small amounts at a time. Like some people who can't just dump a whole ton on money in their accounts, they can try saving about 20 dollars a month, so by the time the years over, you'll have about 240 dollars. Which is way better then nothing at all. Just try making cuts and such. Like I understand, I recently just started community college and I'm really doubling down on my savings so I can move over to a state college after getting my generals, it's actually a lot cheaper, since right now, all I have to pay for is my textbooks since I come from a low income home, I work about 3 days a week when I'm not at school, which makes me about 500 per paycheck(twice a month). I give my family 150 or so each check, then usually keep about 150 or 100 depending on which check it is. It does me wonders. By the time I finish my generals, I'll have enough money to pay for a good majority of my state college, which is around the time I'm trying to move out hopefully if the prices of housing don't rise up even more.
I understand the stress. I am in the process of building an emergency fund but it will be worth it with planning and self discipline
+Chelsea Well I'm in university full time right now and I'm not working at all while class is in and I always have around a paychecks worth of cash in my checking account. Don't know how one wouldn't, I mean how do you expect to pay for things if you don't have around 1k in your checking?
Keeping a whole check in a checking account is a great 💡
The best way to use your checking account is to not use it. Your debit card and check book are for emergencies only. Set up all your bills to be paid automatically from your credit card (hopefully an awesome like the one from Citi/Costco that has a good reward system) Keep up with your budget and pay off your card every month. Also, be sure to keep up with the closing date each month. I also keep the balance really low before the month closes to decrease my credit utilization. I want those reward points and a good credit. Bonus: It's way easier to deal with fraud if your credit card info is stolen vs. your debit card. It's always best to keep an eye on both but you have more leeway to deal with credit fraud and you're liable for less.
My bank dings me with a monthly fee of about $15 if my chequing account falls below $4000, even if it's just one day in a 30 day period. So just to be safe, I like to have a minimum of $5000 in that account.
damn sounds like you need to switch banks unless it doesn't put you out or make it difficult for you to maintain that $4000 minimum. usually most checking accounts are free of charge so long as you maintain a direct deposit transaction in your account every month.
Wish me luck, I’m a first generation college student who is struggling greatly! 😭
Something that my bank alerted me to was doing too many transactions. Specifically deposits. I had three jobs jobs and had direct deposit for only one of those jobs. I also had a set up where 30% of my direct deposit would go into my savings and $75 every month would go into my savings account from my checking account. I was incredibly busy (see shopping and working), so when the bank called my house to speak to me about the excessive deposit and transfers that were occurring I wasn't there. Long story short, you have to make sure your bank knows your situation, or you will be watched for suspicion of being a money launderer.
Animefreak242 that’s true. I overlook on account with possible kiting at work. I am able to see patterns of age of account owners and typical checks deposit that are possible fraud.
Ladies, establish a relationship with your banker! My banker and I are friends by this point. I overdrafted once and she waived all fees, because it was a one-time thing I haven't done since. Aside from the fact that it'll help you financially, let's not forget bankers are people too! Get to know yours and be friends with them. :)
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how i'm supposed to pay attention in personal finance when they got this shawty explaining how to use checking accounts. rule 1 of getting people to pay attention: don't use baddies to get your message across. all i focused on was the blondie shes so bad