In an age of online banking and smartphone apps, many consumers no longer bother to balance or reconcile their checking accounts. But there are still some good reasons to go through these seemingly outmoded exercises.
To understand why that’s the case, it’s helpful to define two terms that might be unfamiliar to consumers who don’t use paper checks or cash withdrawals or a check register to record their transactions.
Balancing. Balancing a checking account shows how much money is available. To balance an account, add all your deposits to the beginning balance for an account’s statement period and subtract from the subtotal checks you’ve written, ATM and debit card transactions, cash withdrawals and bank fees. This will determine the ending balance on a given date. A current balance can be calculated at any time.
Reconciling. Reconciling a checking account compares the bank’s records to the account holder’s check register to discover errors or unauthorized activity. Your check register should contain a running total of all the transactions.