The best way to avoid fees and penalties on your checking account is by making sure that you correctly balance it each month. A balanced account means simply that the tally of deposits and purchases you've made matches up with your monthly statement. It sounds challenging, but it's really easy.
An even easier way to balance your checking account is to use financial management software, such as Quicken. You can record your purchases into the program as you make them. Then, when your bank statement arrives, you can run a program that will walk you through the process of balancing your account. All you have to do is click your mouse. The computer does the math for you.
Everybody makes mistakes from time to time. When you make mistakes on your checking account register it can result in overdrafts, also known as bounced checks. This is when you write a check for which you lack the money in your account to cover.
Overdraft fees on bounced checks can be very costly, with most banks charging $25 to $35 for each one. It's not unusual for someone to miscalculate and bounce a number of checks in a row. Note that the new law limiting the overdraft fees customers can be charged applies only to ATM withdrawals and debit card purchases, and not to checks.
Fortunately, there are some remedies when this happens.