Using a checking account is a convenient way of paying bills like credit cards and tuition fees. Just write a check and there you go. But if you’re not careful, you may be needlessly making your bank richer (and yourself poorer).

So what are the five common mistakes you can make with a checking account? And what can you do to avoid them?

Mistake #1: Bouncing checks

Why it’s wrong: This is a very costly mistake, as you will be charged not just a fixed fee but also an additional fee per day for insufficiently funded check issuances.

If you fund a temporary overdraft, i.e., it’s honored, you can pay up to P1,000 plus P200 per P40,000 per day. If your check is returned, the fee is P2,000 plus P200 per P40,000 per day.

If you keep on forgetting to sufficiently fund your account, the penalties may accumulate to quite a hefty amount.

And if you let your checks bounce, you’re going to get yourself in trouble.

What to do: Stay on top of your account balance. Many banks provide tools to make updating painless. You can check your balance online or even via SMS. Or simply call your branch or the call center.

If you need to issue a check quickly and you don’t have time to check your balance, see if you can post-date it a few days to give you time to fund your account.

Mistake #2: Having an ATM card

Why it’s wrong: While it may be convenient having a checking account with an ATM card (you can issue checks and withdraw cash from an ATM), this can also cause a lot of headaches. For starters, it’s a lot harder to monitor your transactions.

If you have the habit of making ATM withdrawals from other banks, say twice a week, at P10 per withdrawal and a peso per inquiry, you will have spent P88 in a month, or P1,056 in a year.

What to do: If you really want an ATM card to go with your checking account, plan your withdrawals ahead so you only withdraw from your bank’s ATMs.

Better yet, hide the card in your drawer and use it only for real emergencies. If you have a regular savings account with an ATM card, e.g., a payroll account, use that as your main ATM account.

Open a checking account with a good old-fashioned passbook, not with an ATM, and a monthly statement.

Mistake #3: Not balancing your check book

Why it’s wrong: The old-school way of balancing a check book is to manually write the transaction details on the register and keep a running balance of your account whenever you issue a check, make a deposit, earn interest, are charged fees or subjected to withholding tax.

This should be a breeze for a certified public accountant but may not be for you. If you’re not as diligent and patient in recording transactions, chances are, you will make mistakes.

What to do: A better alternative is to sign up for online banking and check your balance, which is automatically updated and almost in real time (there are cut-off times for system updates).

Mistake #4: Overfunding your account

Why it’s wrong: If you don’t have enough money in your account, you’re in danger of being overdraft. If you let your balance get depleted below the minimum average daily balance, you could be charged a service fee of P200 to P500 per month.

The other extreme is overfunding your account. Most regular checking accounts don’t pay interest and those that do pay just a fraction of a percent that it doesn’t make any sense to keep more than you need. You’d think it doesn’t cost you anything but it does – in opportunity cost.

Instead of languishing in a checking account, your money could be earning more – a lot more – in a time deposit or mutual fund.

What to do: Don’t park your excess funds in your checking account. Proper planning of monthly expenses that need to be paid with a check should allow you to keep just enough money in your account.

Remember that your checking account should purely be a transactional account to be used for paying expenses.

Mistake #5: Getting careless

Why it’s wrong: Checks are also a favorite tool of scammers. Some common ways your checking account can be misused are signature forgery, tampering of an issued check, and outright counterfeiting. Your account can be wiped out and even be charged for overdrawn checks issued by the thief.

What to do: It would be nice if you have a signature that’s not easy to forge for starters. Otherwise, just make it a point to be extra careful: don’t write “pay to cash” on your checks, keep your check book in a secure place, don’t leave blank checks lying around. Fill out all lines, and monitor your account online, keeping a special eye for suspicious transactions.

If you discover a check or a checkbook has been stolen, call your bank immediately and request a stop payment.

(This article is from MoneySense, the country’s first and only personal finance magazine. Visit www.moneysense.com.ph for more.)