Introduction to the Checkbook Register

Understanding the checkbook register in money management

If you pick up your checkbook and open it to the front you will likely find the checkbook register. It is the section of your checkbook that you use to record deposits and withdrawals from the checking account. Common withdrawals might include cash from the Automatic Teller Machine (ATM) or via charges when using the ATM card as a charge card or by writing out a check. Deposits might include any you make in cash or even electronically through services such as direct deposit.

Filling out the checkbook register is not difficult which you can learn to do on this website. In fact, Microsoft Excel checkbook templates are available for download and use. Bank of America also offers online tools that duplicate the functionality of paper checkbook registers. One can turn toward sophisticated checkbook software solutions such as ClearCheckbook that offer a comprehensive all-in-one information entry and reporting system. Another possibility is the use of a checkbook calculator, an electronic solution that can be carried around.

Why Use a checkbook register?

So why do people use checkbook registers? The forbidding terms personal budgeting and bank reconciliation succintly summarizes the reason why people record all the outgoing and incoming money to a checking account. When the bank of your checking account issues a statement for that month's activity, you have a pretty clear idea of how much money is in there. But over the course of the next month, until you get the next statement, constant aditions and deductions from the account will cloud your knowledge of how much is in the account.

Practice good personal finance to avoid penalties and fees

Without a checkbook register that tells you how much money is in the account, you may end up issuing a check that the account cannot cover. In short, you cannot effectively balance a bank account with it. Two things may happen at this point. The first is that bank may refuse to cover the check, so that after several days the recipient of your check will find that there is no money forthcoming and will not only ask for the payment again but also impose a returned check fee. Furthermore the bank must impose a bounced check fee. The second is that the bank may cover the check, but since they must dip into their own resources until you pad your account for the missing amount, they will impose an overdraft fee.

An era of increasing penalties and fees

One of the ways in recent years for banks to increase their profits is to increase fees and penalties. Overdraft fees in the scenario outlined above are one of those methods although very recently this has became a target of congressional legislation. The new legislation (effective in July 2010) states that banks must have an opt-in program for consumers to be charged an overdraft fee when a charge is declined on grounds of insufficient funds. If the consumer does not opt-in, the charge would merely be declined. This bodes well for ATM charges that go over an account's limit, but is a nightmare for a check writer.

End of overdraft means more pain for check writers

If a consumer does not opt into the overdraft program of a bank, he or she will find that a check written for an amount more than what is in the account will not be accepted. This then triggers a "bounced check" fee from the bank, as well as a "returned check" fee from the target of the check. Imagine writing a rent check or a mortgage check and it does not go through. First the would-be recipient of the check likely will get irate, second you bear the brunt of several kinds of fees. People who do not balance their checkbooks are more liable to run into this kind of trouble.

Protect yourself with a checkbook register

Good personal accounting and personal finance practices will help the individual avoid many of these financial penalties and fees. The checkbook register is one of the most primitive yet effective tools of money management. Using a checkbook register to balance the account by recording both credit and debit transactions helps reduce the chance of error on your part, and correspondingly the chance of incurring another of those dreaded $25-$40 fees.