Chelsea: Hi, I'm Chelsea

Lauren: And I'm Lauren

Chelsea: And we are...

Together: The Financial Diet! 

Lauren: And today we're going to be talking about checking accounts and specifically how you can use yours better by really understanding the ins and outs of it. Now nearly everyone watching this probably already has a checking account and you probably think that this sounds a little bit dull, but I'm actually shocked at how many people cannot answer questions about their bank's policies on specific issues. And I don't know about you, but it's really important for me to feel like I have a true handle on my financial accounts and it's something that I wanted to be really knowledgeable about. 

Chelsea: A general rule here at TFD is that it's not just the money you have, it's what you do with that money and 2 people who have like the exact same amount, but are smarter or less smart about how they handle their accounts are going to have completely different outcomes. So the article that this video's based on was actually inspired by a Reddit thread that we saw where this guy was asking about whether or not the way he used his checking account could effect his credit score. And we saw that and we were like "Well a) good question, we have no idea and b) how many other things about our checking accounts do we just not know? It's sort of this basic tool that everyone has that you may be using in the completely wrong way. 

Lauren: So we made this video to help you make the most out of the checking account that you already have. So the first thing is to really know your banks overdraft fee policy. Over drafting is simply when you take out too much from your account, so the balance falls below zero. 

Chelsea: This is something that I have like an extreme amount of personal experience with. 

Lauren: Yeah, same. I remember getting the call from my mom telling me that the bank just called, you overdraft, run right down there right now with a $50 bill to top off your account. 

Chelsea: Uh, the bank stopped calling me. They were like "She's dead so we're never going to get any money out of her." I over drafted like everyday. 

Lauren: So depending on the bank that you have the fees will be different. For example, your bank could charge an overdraft fee on the one transaction that pushed your account over or it could lump all the transactions together and charge you an overdraft fee on each one that occurred that day. 

Chelsea: So the average overdraft fee is about $35, but like Lauren said, depending on whether you get just the one or you get for every transaction past zero that could be the difference of, you know, hundreds of dollars in a day. Especially if you didn't realize in time that you went over zero, but depending on the bank that you go to there's a huge variation in terms of like the bank letting you off and saying "Okay, we'll waive this one" and generally speaking the better relationship you have with your personal banker the more likely they'll be to waive an overdraft fee here and there if it's not a pattern. 

Lauren: So if you find out that you do have an overdraft fee, the first step should be calling the bank to see if you can get that fee waived. 

Chelsea: So the next thing that you want to do with your checking account is consider the potential fees that you might incur. So there are a ton of different fees that are associated with boring old checking accounts and that's everything from ATM fees to international transfers to low account fees to lost debit card fees. Within the exact same thing depending on the bank that you're going to you could be talking about hundreds of dollars of difference in a year. So you not only have to figure out the kind of fees that are associated with your particular account, you also have to figure out what's the best way to avoid them even if that just means keeping a certain amount in your account month to month. But if you have a checking account that's slapping you with ridiculous fees for pretty much everything you do, maybe it's time to fix banks. 

Lauren: The next thing would be to utilize direct deposit, online banking, and banking apps. Using these things will make your life infinitely better. It took me nearly a year at my first job to sign up for direct deposit and by the time I finally did the HR person like couldn't stand me. 

Chelsea: And I should mention also that it took me a solid year to figure out that you can deposit a check by taking a picture of it, which completely changed my life. 

Lauren: And Chase actually recently reported that more checks are cashed via their mobile app and ATMs in their actually branches. So we'll link out to an article that covers some of the best banking apps in the description below. 

Chelsea: If you're anything like me and you're both a little bit lazy and constantly on your phone, the quality of the app for the checking account you have should be like the number 1 criteria. So next you need to know if your checking account can potentially impact your credit. score. So in short the answer is no. Even things like closing a checking account is something that banks generally don't report to the bureaus and those pesky overdraft fees are also not considered on your credit report. But there is something called the check system reports, which is sort of like a mini credit report that banks use and if you're doing something like closing a checking account too frequently another bank might see that and for example not let you open one. So long story short, while you may not see your checking account behavior on like CreditKarma you should definitely be aware of how you're using your checking account because other banks will see it. 

Lauren: And our final tip is that you shouldn't be keeping too much money in your checking account. So you want to keep enough in there to cover your day to day expenses, but you want to leave a majority of it in both your savings account and then any specialty accounts that you have like a 401k and IRA or stocks. According to one expert that was featured on an article on learnvest about this topic he recommended that you keep one full paycheck in your checking account at all times. That means that you have roughly a 30 day cushion in your checking account. 

Chelsea: And beyond that many financial experts will recommend keeping your emergency fund, which is about 6 months of expenses in your regular savings account and your savings beyond that be in a specialty account like Lauren mentioned where they can really start making you some money. And as someone who's written about her former life as what I refer to as a "checking account hoarder" where I essentially just like dumped as much money as I could in my checking account to see a high number and let it sit there. I can confirm that it's not just having the right account it's actually using it the right way. 

Lauren: So as always thanks for watching and don't forget to hit the subscribe button and go to thefinancialdiet.com for more

Together: Bye!