To protect your identity and your assets, you should make sure that you reconcile your bank and credit card accounts each month when you receive your monthly statements. For those who are good with numbers, this task is not too difficult. But for some, this is an extremely daunting task. You procrastinate and then give up.
The fraudsters are relying on the fact that many people don’t even open their monthly bank statements. This gives them more time to clean out your account while you are not looking. Furthermore, there are honest errors made by banks and credit card companies. If those errors go unreported for too long, you might have difficulty getting the error corrected.
Reconciling those accounts is not as hard as you think. When we reconcile a bank or credit card account for our clients, we use little tricks that we have learned over the years to make it easier to find out-of-balance situations.
Here are some of those tips:
- Look For Bank Charges. The first step in trying to find out why you don’t agree with the bank’s balance is to carefully review your bank statement for bank charges or adjustments. These will take the form of bank service charges, bad check charges, interest income, wire transfer fees, safe deposit box fees, and other similar charges to your account. Record these in your register and adjust you check register balance.
- Search for the Dollar Amount of Your Difference. When you have checked everything off in your register, adjusted for outstanding checks and deposits, and your balance does not agree with the bank’s balance, look through the bank statement for the exact dollar amount of your difference. Sometimes the easiest solution is to find that exact amount on your bank statement, which simply means that a transaction that cleared your bank account was not entered in your check register.
- Divide Your Difference by Nine. Take your difference and divide by 9. If the answer is a round number with no pennies, then you have a transposition error. A transposition error is a check or deposit amount where you switched two numbers during the recording process. For example, if the check was written for $192.00 and you wrote $129.00 in your register, the difference between $192.00 and $129.00 is $63.00, which divided by 9, is a round number equal to 7. In order to find your mistake, look for numbers written in the wrong order in your register.
- Divide Your Difference by Two. Take your difference and divide by 2. Then look for the answer in your check register. What this tells you is that you deducted an amount when you should have added it, or vice versa, you added the amount when you should have deducted it.
When you have found the error and have balanced your check register, make sure that you question any items that you did not have recorded in your check register. The bank does occasionally make mistakes, and they will correct their errors if you bring the mistake to their attention. But if you see unusual transactions that you don’t remember making on your bank or credit card statements, call you banker and ask them to research the item for you. If there are a lot of these types of transactions, you should discuss freezing the account to prevent any further fraud.
Reba Rogers, CPA, is the founder of Secure Aging, a group of care managers who preserve the independence and protect the assets of seniors by helping them with financial management. She is also a Director Consultant for BNI (Business Network International), a referral marketing organization which gives her access to many trusted business professionals in the community.
