How do you use your checking account?

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muitu
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How do you use your checking account?

Post by muitu »

What are your thoughts on the proper usage of a general checking account - where to use it over a credit card, average balance to keep on it, type of expenditures to pay with it, etc.

I see this forum loves their rewards from credit cards - how do you, personally, treat that relationship between your checking account and credit card?

Simple question - love to hear different responses. :D
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samsoes
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Re: How do you use your checking account?

Post by samsoes »

I use my checking account to pay my bills. I have always used it for that purpose.
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jebmke
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Re: How do you use your checking account?

Post by jebmke »

I use credit card whenever possible. A few things like utilities are on direct debit. Bill pay almost everything else. Manual checks - once or twice a year.

I arranged all direct debits to hit at the beginning of the month. The CCs are all due in the third week. But the balance dues is always known in the last week of the prior month. So, by the beginning of the month, I have a pretty good fix on cash needs for the month.

The relationship between my credit cards and my checking account is very friendly. The cards get paid on time every month.
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OnceARunner
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Re: How do you use your checking account?

Post by OnceARunner »

Credit card for everything that doesn't have a fee attached to it.

Checking account pays the credit card bill once a week.

Never have less than $1,000 in checking account.
Last edited by OnceARunner on Tue May 17, 2022 12:54 pm, edited 1 time in total.
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Wiggums
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Re: How do you use your checking account?

Post by Wiggums »

We write very few checks. We pay electronically whenever possible using the account routing number if automatic payments are supported. Otherwise we charge everything else assuming there is not a convenience fee.
Last edited by Wiggums on Tue May 17, 2022 12:53 pm, edited 1 time in total.
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Marseille07
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Re: How do you use your checking account?

Post by Marseille07 »

My usage echoes others. Just bill pay, after using CCs where possible (but CCs have to be paid out of checking).

I keep my salary deposits there then empty at EOM.
lostcoast
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Re: How do you use your checking account?

Post by lostcoast »

I use mine like a slot machine, I put money in and out it goes.
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HomerJ
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Re: How do you use your checking account?

Post by HomerJ »

Credit card for most everything.
Auto-pay CC from checking each month.
Some monthly bills are auto-charged to CC, some are auto-charged to checking account.
Direct Deposit paychecks into checking.
Occasionally pull cash from checking account via ATM.
We write maybe 3-4 actual checks a year?

We do keep a fairly large amount in it... about 4-5 months of expenses.
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Candor
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Re: How do you use your checking account?

Post by Candor »

I have two bills that are direct draws from my checking account that were set up decades ago. Everything else is paid by credit card. I write a couple of checks a year at this point.

While working I liked to keep $5000 in the account but now that I have retired I just transfer whatever is needed for the bills once a month from an HSA and keep around $1000 or less in the acct on a normal basis.
Last edited by Candor on Tue May 17, 2022 1:03 pm, edited 1 time in total.
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jebmke
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Re: How do you use your checking account?

Post by jebmke »

HomerJ wrote: Tue May 17, 2022 12:55 pm Occasionally pull cash from checking account via ATM.
My wife and I were just talking about cash (currency). In mid-March, 2020 when things were shutting down I pulled $400 out in $20 bills and stuck it in a metal box in my office. I still have most of it left. Even some of the small local businesses in the area that never took credit cards before the pandemic now take them. More and more are accepting Apple Pay - but mostly larger businesses and coffee shops which seem to stay current technically anyway.
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student
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Re: How do you use your checking account?

Post by student »

My checking account is my hub. Most transactions between accounts go through it.
fposte
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Re: How do you use your checking account?

Post by fposte »

I'm in an area where a lot of trades and services are still check-based, or else add a whopping surcharge to other payments. So garbage service is still check-based, and I just paid for dryer repair the same way. Otherwise the account is mostly just the source for credit card payments.
backpacker61
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Re: How do you use your checking account?

Post by backpacker61 »

Like the others, I use a credit card except for bills that have convenience fees that would exceed the credit card rewards. Mostly, this consists of:

o quarterly estimated tax payments to the IRS
o payments to my rural electric cooperative
o property taxes annually
o vehicle registration to the DMV
o pay the credit card bill in full monthly
o annual payment for my safe deposit box rental
o irregular payments to friends for reimbursements of travel expenses (on joint trips), etc.
o ad hoc payments to tradesmen; roofing work, etc.
o homeowner association dues

I use the online bill pay feature as much as possible, and write paper checks as a last resort only.

On the deposit side, my paycheck is direct-deposited to my checking account (twice a month), plus any bonus payments.

I used to have monthly investment withdrawals from my checking account that went to mutual funds in taxable brokerage accounts, but my employer began allowing after-tax contributions to the employee retirement savings plan (with in-plan Roth conversions), and I'm now wholly consumed cash flow-wise trying to hit the limit on that, and no longer really contribute to the taxable brokerage account, other than transfers of employee stock from ESPP and RSU shares.

For the amount in my checking account, I keep the balance relatively low ($5000-$10000) except shortly before my quarterly estimated tax payments are due.
Last edited by backpacker61 on Tue May 17, 2022 1:46 pm, edited 2 times in total.
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delamer
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Re: How do you use your checking account?

Post by delamer »

I don’t charge any amount that I don’t already have available in the checking account that will be used to fully pay the credit card that month.
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hoofaman
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Re: How do you use your checking account?

Post by hoofaman »

I'm overly paranoid, but I keep the checking account empty and have overdraft "protection" disabled. I only transfer funds in briefly as needed to pay credit card once a month, I don't use it for anything else anymore, all the services I use accept CC now
aristotelian
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Re: How do you use your checking account?

Post by aristotelian »

I put as many expenses as possible on credit card and pay the balance every month. I get 2.625% cash back which is better than nothing and goes to cover the hidden fees that Visa/MC charge to vendors and vendors pass to consumers. I write as few checks as possible, generally only when there is an extra charge to use the credit card.

I keep a cushion of about $3k. Any amount over that gets invested.
H-Town
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Re: How do you use your checking account?

Post by H-Town »

muitu wrote: Tue May 17, 2022 12:45 pm What are your thoughts on the proper usage of a general checking account - where to use it over a credit card, average balance to keep on it, type of expenditures to pay with it, etc.

I see this forum loves their rewards from credit cards - how do you, personally, treat that relationship between your checking account and credit card?

Simple question - love to hear different responses. :D
On average:

Day 1-14: checking account has $100 to $200 balance
Day 15: when paycheck comes in, I pay the full balance on our credit cards and do bill pay if applicable. Then I move the remaining cash to high-yield saving account. Just keep $100-$200 balance.
Day 16-29: checking account has $100 to $200 balance
Day 30: same as Day 15.
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Michael Patrick
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Re: How do you use your checking account?

Post by Michael Patrick »

Like others, I try to wring as much cash back out of credit cards as I can.

Me and DW are both still working, and our paychecks get deposited into checking. Then bills are paid out of that account. If there's extra cash, I move it into a money market account. If I come up short, I transfer back from the MM. My goal is to have enough in the checking account to cover what's going out, but not much more.
tashnewbie
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Re: How do you use your checking account?

Post by tashnewbie »

Checking account is my hub account.

Paychecks get deposited there and then money gets funneled to wherever it needs to go.

Bills/expenses (mostly credit card payments)
ATM withdrawals (~1/month) for service that doesn't take cards
Investment accounts

Balance fluctuates throughout the month depending on when paychecks land. Generally no more than 1 paycheck is there at any given time.
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ruralavalon
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Re: How do you use your checking account?

Post by ruralavalon »

muitu wrote: Tue May 17, 2022 12:45 pm What are your thoughts on the proper usage of a general checking account - where to use it over a credit card, average balance to keep on it, type of expenditures to pay with it, etc.

I see this forum loves their rewards from credit cards - how do you, personally, treat that relationship between your checking account and credit card?

Simple question - love to hear different responses. :D
All of our regular bills (insurance, utilities) are on autopay, many on autopay from our credit cards, some on autopay thru our joint checking account. We use the credit cards for most purchases (grocery store, pharmacy gasoline, car repairs etc.).

We use the checking account to pay the credit card bills every month, to pay taxes, and for gifts to our children..

Both our Social Security benefits and the monthly Required Minimum Distributions (RMDs) from my rollover IRA are paid automatically to our joint checking account.
Last edited by ruralavalon on Tue May 17, 2022 2:48 pm, edited 1 time in total.
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IowaFarmBoy
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Re: How do you use your checking account?

Post by IowaFarmBoy »

I pay everything possible by credit card for the rewards. I have one or two bills that draft from our checking account because of fees or because the vendor doesn't support credit cards. I have autopayments set up for all credit cards from the checking account along with having pension, SS and RMDs automatically deposited. I try to keep one month's expenses in the account at all times for peace of mind. It is higher at the first of the month when my pension hits but our biggest cc payment hits a few days later so it is back down pretty fast.
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Doom&Gloom
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Re: How do you use your checking account?

Post by Doom&Gloom »

Individual checking account--
10 credit cards' statement balances pulled on the due dates each month.
2 paper checks written in 2021--(car tag and to obtain copies of death certificates).
2 insurance payments pulled each month.
Receive direct deposits.
Transfer funds back and forth to joint checking account, HYSA, PayPal, etc.

Joint checking account with DW--
3 paper checks written in 2021--(property taxes and attorney)
2 insurance payments pulled each month.
Transfer funds back and forth to my individual checking account, DW's individual checking account, HYSA, PayPal, etc.

All bills other than those mentioned above are paid via credit card.
Minimum required balance for no fees for each checking account is $1500. One is interest-bearing, so that adds a couple of pennies/month.
I always keep more than the minimum balance, but no more than I expect to need in the next month or two.
I recently had to push a payment from my checking account. It had been so long from the last time that I had to re-learn how to do it.
Of course there may occasionally be a reason to write a check not noted above.
Last edited by Doom&Gloom on Tue May 17, 2022 3:21 pm, edited 1 time in total.
Doctor Rhythm
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Re: How do you use your checking account?

Post by Doctor Rhythm »

Our main checking account is with a national brick and mortar bank. Salary and most other random checks get deposited there. I try to keep the minimum balance at roughly 1 month’s expenses. This might be excessive, as it’s linked to other accounts that can quickly transfer in much more than that if needed.

— Credit card is used whenever possible. Cash & checks almost never.
— CC payments and a few other recurring bills are pulled from the checking account via auto-pay. There’s a concurrent thread on safety of auto-pay; I’m firmly on the *shrug* side of the debate.
— This account is linked to an on-line bank which is used for transactions with brokerages, tax collectors, and other “big money” entities. Any excess money in checking is transferred to the on-line bank.

Brick-and-mortar account for real world needs. On-line bank for abstract, intangible financial things.

And the occasional account that does nothing except earn a signup bonus.
Vanguard User
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Re: How do you use your checking account?

Post by Vanguard User »

Checking account is the middle man. I don’t write checks nor I pay with debit card. I keep a $100 balance.

Direct deposit purpose. Cash free ATM.

Pay bills from CC using ACH.

Wells Fargo. Customer since 2003.
Last edited by Vanguard User on Tue May 17, 2022 4:04 pm, edited 4 times in total.
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anon_investor
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Re: How do you use your checking account?

Post by anon_investor »

I use my checking account for direct deposit and transfering money to my brokerage or savings and occationally will write a check, I never use a debit card. I pay all of my bills via ACH from savings accounts.
Broken Man 1999
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Re: How do you use your checking account?

Post by Broken Man 1999 »

INTO checking account: SS benefit and TIRA distributions.

OUT OF checking account: Electric bill, credit card bills, four 529 plans, all pulled out of checking account. Yard guy paid via bill-pay. A physical check written every now and then, usually to a small tradesperson.

Very few transactions involving checking account, as so many service providers paid by credit card.

Broken Man 1999
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sailaway
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Re: How do you use your checking account?

Post by sailaway »

Broken Man 1999 wrote: Tue May 17, 2022 3:47 pm INTO checking account: SS benefit and TIRA distributions.

OUT OF checking account: Electric bill, credit card bills, four 529 plans, all pulled out of checking account. Yard guy paid via bill-pay. A physical check written every now and then, usually to a small tradesperson.

Very few transactions involving checking account, as so many service providers paid by credit card.

Broken Man 1999
How do you pay the credit card? Does that come out of a savings or MM account, rather than checking?
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Re: How do you use your checking account?

Post by Misenplace »

This topic is now in the Personal Finance (Not Investing) forum.

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Broken Man 1999
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Re: How do you use your checking account?

Post by Broken Man 1999 »

sailaway wrote: Tue May 17, 2022 3:52 pm
Broken Man 1999 wrote: Tue May 17, 2022 3:47 pm INTO checking account: SS benefit and TIRA distributions.

OUT OF checking account: Electric bill, credit card bills, four 529 plans, all pulled out of checking account. Yard guy paid via bill-pay. A physical check written every now and then, usually to a small tradesperson.

Very few transactions involving checking account, as so many service providers paid by credit card.

Broken Man 1999
How do you pay the credit card? Does that come out of a savings or MM account, rather than checking?
My credit card bills are paid via pulls from my checking account. I don't keep much in the savings account as the interest rate is abysmal. Right now I have $8.20 in my savings account account.

Around the end of the month, I know the dollar amount required for my bills for the following month. I set up a distribution from my TIRA to cover the bills due in the first couple of weeks of the month. My SS benefit pays the remainder of my monthly bills. Repeat each month.

DW does the same for her share of the bills. Her bills are about the same each month, so her distribution from her TIRA is automated. My bills are lumpy, so I do a manual distribution each month. The life of cash in my checking account is at most two weeks. I run my checking account very lean.

My distribution from my TIRA is the only activity I need to do so far as paying bills, as all bills are paid automatically, save a one-of bill that shows up occasionally.

Broken Man 1999
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greenway23
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Re: How do you use your checking account?

Post by greenway23 »

For those who still pay utility bills via ACH or debit card due to convenience fee for credit card payments, look into PayPal bill pay. There’s a good chance your utility company is a payee and you can pay your bill via credit card sans convenience fee.
Katietsu
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Re: How do you use your checking account?

Post by Katietsu »

Credit cards whenever possible without a fee. Sometimes will pay the credit card fee is the fee is less or just slightly more than the cash back rewards. Keep track of credit card balance with the app and tend to make a payment if I have spent more than my average monthly spend. So, my monthly payment is always about the same, give or take $250.

Two checking accounts:
-I use one account as my hub. Direct deposits in. Credit card, utility and investments out. Bill pay for personal checks when payee can be paid by mailing a check. I keep a largish balance, low 5 figures, and use this account for the "extra" bank services when needed.

-The second account is at a credit union with no minimal balance. Keep just a few hundred in the checking. Keep a couple thousand in a savings account at the same credit union. This is the account that I would connect to Venmo or write a check for the plumber. Not very many funds at risk this way.
MikeG62
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Re: How do you use your checking account?

Post by MikeG62 »

I pay pretty much everything that can be paid with a CC with a CC (my DW pays most things with a CC - although for some reason doesn't like to charge small dollar amounts in the range of or below $20), unless the fee exceeds the cash back earned on the charge.

Checking account is therefore used to autopay the CC statement balance when due, autopay our auto leases (they won't allow us to put it on CC) and our cell phone bill ($20 monthly discount for direct pay) and for pocket money. I try to write as few checks each year as possible - most are gifts to family members.

Typical balance in checking account is no more than $1,000, unless a bill is coming due in which case I transfer the necessary funds in a few days prior.
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grogu
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Re: How do you use your checking account?

Post by grogu »

OnceARunner wrote: Tue May 17, 2022 12:52 pm Checking account pays the credit card bill once a week.
Curious, why do you pay your credit card weekly? Or do you have 4-5 cards, each with a different due date that works out to be paying a different one each week?
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Harry Livermore
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Re: How do you use your checking account?

Post by Harry Livermore »

I'm very old fashioned.
Most bills are paid with a paper check each month- notable exceptions are cable and AT&T wireless, which I pay by credit card. Over the last decade, these two vendors specifically have tightened up the due date such that I would have to turn around a check on the very day I receive the bill in order to avoid a late fee, and sometimes not even then. I simply dial up and pay with AMEX on the day they arrive.
Like others here, I think of the checking account as a "conduit"; that is, money is there temporarily for the purpose of spending. So I transfer money from my business draw account (pass through entity) as needed; if it's a "fat" month for the business, the excess goes to our savings account. In "lean" months I transfer money from the savings account as needed. Some clients pay me through a payroll service and then the paycheck gets deposited into this personal checking account. Venmo and other "newfangled" payment systems deposit to this account. Regardless, not much money sits in this account, at least not for very long.
Some local vendors and tradesmen will only accept a check, and some seem to to indicate both checks and credit cards are costly to them; my home heating oil vendor has repeatedly offered to put us on bill pay since "paper checks cost us money to process"... my answer to them (in my head, I'm too polite to speak this) is "get another bank for your business"...
My spouse and I also maintain a joint checking account; this is mainly used for doctors' bills and copays, and also college tuition payments and kids' camp and activities. We try to keep this account very "clean" and simple, with fewer transactions.
I pay the majority of "big bills", such as mortgages, utilities, insurance, and taxes, from my checking account. My spouse takes care of groceries (actually I'd call that a "big bill" too lol), her car payment, and additional minor monthly bills from her checking account.
I know many here will think this is gibberish, but I think there is something to be said for the "thoughtful act" of sitting at a desk with a stack of paper bills, and writing a check for each one. I think a part of being frugal, for me, is being a hustler and bringing in money "fast", and being thoughtful and "slow" in letting it out. Ones and zeros on a screen feels less real, so I think it's easier to let it go. At least for me.
Personal finance.
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cnrohio59
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Re: How do you use your checking account?

Post by cnrohio59 »

We only have checking account, no savings account. Pay bills electronically as much as possible and end up writing 50-60 checks a year. We use credit cards for many expenses during the month and pay off credit card balances in full each month. Checking account balance can vary widely since it is the hub for monthly expenses - e.g. in 2022 balance varied between $4k and $40k. Money is transferred into the checking account on a quarterly basis as needed for anticipated expenses.
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Re: How do you use your checking account?

Post by sailaway »

cnrohio59 wrote: Wed May 18, 2022 10:29 am We only have checking account, no savings account. Pay bills electronically as much as possible and end up writing 50-60 checks a year. We use credit cards for many expenses during the month and pay off credit card balances in full each month. Checking account balance can vary widely since it is the hub for monthly expenses - e.g. in 2022 balance varied between $4k and $40k. Money is transferred into the checking account on a quarterly basis as needed for anticipated expenses.
My initial reaction was that I don't think I have ever written that many checks a year, but rent, electricity, phone, car loan would have been enough to get me there, wouldn't it? So much postage went into paying bills that way!
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Re: How do you use your checking account?

Post by investnoob »

These days my chequing account is only used to pay rent and one utility bill - both are debited automatically. The utility charges a fee to use credit.

I use my credit card for pretty much everything else now, unless a vendor doesn't accept credit cards (which is pretty rare here).

edit: I do make cash withdrawals to give funds to my father every now and then. He has not yet figured out online banking. That is something I should set up for him so that I can e transfer funds.
jebmke
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Re: How do you use your checking account?

Post by jebmke »

grogu wrote: Wed May 18, 2022 8:05 am
OnceARunner wrote: Tue May 17, 2022 12:52 pm Checking account pays the credit card bill once a week.
Curious, why do you pay your credit card weekly? Or do you have 4-5 cards, each with a different due date that works out to be paying a different one each week?
Two reasons I have seen on this topic in previous threads by others. One, low credit limits so paying off clears the available credit. Two, some people don't like to see an outstanding balance. There may be other reasons.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
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riverant
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Re: How do you use your checking account?

Post by riverant »

I try to minimize individual transactions in my checking account in favor of my credit card, however some merchants require checks (house cleaner, some doctors). For those, I usually use my bill pay feature.

We generally target a 15K balance, increased from 10K a few years back. It's more than we need, but I don't like having to be aware of credit card autopayments or worrying about liquidity.
dvvader
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Re: How do you use your checking account?

Post by dvvader »

I use our checking account to receive direct deposit of my paycheck, autopay the mortgage and credit cards, and dispense automated savings. Venmo is linked to the checking account, and used for small transactions (usually to send/receive reimbursements for various things to friends). I also write 5-10 paper checks a year. I have a debit card also, but it is only used for the very rare ATM trip (we use mobile deposit for checks and generally hold on to physical cash). My checking account balance is usually between $10-20k and I am comfortable with that.

In short, my checking account averages maybe 10 transactions a month. I pay everything I can with credit cards for the points and consumer protections, then pay off the credit cards with my checking account. Is this "proper"? I don't know, but it works for us!
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SmileyFace
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Re: How do you use your checking account?

Post by SmileyFace »

Checking account is only used over credit card if fees are charged (which is the case for my utilities, real estate tax and one or two other items - most on autopay). Most everything else goes on credit card - otherwise I would be throwing away a 2% refund.
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Re: How do you use your checking account?

Post by tacobellcow »

My checking account is the central hub for all of my finances. All of my (and my wife's) direct deposits go there first before getting re-routed to other accounts (internally and externally) including savings accounts, college funds, or buying I-bonds. Of course, we also use it to pay bills. We rarely if ever use our debit card linked to the checking account as we don't get cash back and it doesn't have strong fraud protection. Where possible, all of our purchases are made on the AMEX. There's a backup CC for utilities and other small shops that don't take Amex.
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TomatoTomahto
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Re: How do you use your checking account?

Post by TomatoTomahto »

HomerJ wrote: Tue May 17, 2022 12:55 pm Credit card for most everything.
Auto-pay CC from checking each month.
Some monthly bills are auto-charged to CC, some are auto-charged to checking account.
Direct Deposit paychecks into checking.
Occasionally pull cash from checking account via ATM.
We write maybe 3-4 actual checks a year?

We do keep a fairly large amount in it... about 4-5 months of expenses.
We do as Homer does. The large balances are because we have Federal estimated taxes going out via ACH, same for property taxes, insurance payments, and many CC autopay. It wasn’t previously worth it to keep close tabs on it, but I guess with the ramp in inflation, maybe I should watch more closely. Still, nobody pays much in interest, so 🤷‍♂️
I get the FI part but not the RE part of FIRE.
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grogu
Posts: 258
Joined: Thu Jan 21, 2021 11:36 pm

Re: How do you use your checking account?

Post by grogu »

jebmke wrote: Wed May 18, 2022 10:35 am
grogu wrote: Wed May 18, 2022 8:05 am
OnceARunner wrote: Tue May 17, 2022 12:52 pm Checking account pays the credit card bill once a week.
Curious, why do you pay your credit card weekly? Or do you have 4-5 cards, each with a different due date that works out to be paying a different one each week?
Two reasons I have seen on this topic in previous threads by others. One, low credit limits so paying off clears the available credit. Two, some people don't like to see an outstanding balance. There may be other reasons.
I've heard of people doing that when they are about to get approved for a mortgage and want to bump their credit score a few points, but I've never heard of anyone doing that on a regular/permanent basis. Seems like a lot of unnecessary work, but OK, fair enough.
sailaway
Posts: 8215
Joined: Fri May 12, 2017 1:11 pm

Re: How do you use your checking account?

Post by sailaway »

grogu wrote: Wed May 18, 2022 1:19 pm
jebmke wrote: Wed May 18, 2022 10:35 am
grogu wrote: Wed May 18, 2022 8:05 am
OnceARunner wrote: Tue May 17, 2022 12:52 pm Checking account pays the credit card bill once a week.
Curious, why do you pay your credit card weekly? Or do you have 4-5 cards, each with a different due date that works out to be paying a different one each week?
Two reasons I have seen on this topic in previous threads by others. One, low credit limits so paying off clears the available credit. Two, some people don't like to see an outstanding balance. There may be other reasons.
I've heard of people doing that when they are about to get approved for a mortgage and want to bump their credit score a few points, but I've never heard of anyone doing that on a regular/permanent basis. Seems like a lot of unnecessary work, but OK, fair enough.
Meanwhile, I am all excited that a 0% APR on purchases will allow me to buy ibonds sooner.
PFOS
Posts: 27
Joined: Thu Nov 12, 2020 12:59 pm

Re: How do you use your checking account?

Post by PFOS »

My spouse and I each have our own checking accounts that our jobs deposit into. From there, they are either go to investments/savings or are used for monthly bills/credit card statements
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