An unexpected 25% surge in personal thefts and a 4% increase in burglaries are recorded in the first set of official quarterly crime figures since the economic recession took hold.

A worrying rise in what the Home Office calls “stealth and snatch thefts” is accompanied by a 5% increase in robberies at knifepoint, according to the police-recorded crime figures published today comparing October to December 2008 with the same period in 2007.

The figures show a 16% drop in gun crime and a fall in the number of people stabbed to death from 59 to 52 over the same period. They record that the increase in robberies at knifepoint occurred within the context of an overall 2% fall in the total number of street robberies.

Overall there was a 4% drop in offences recorded by the police. The British Crime Survey, which is based on a survey of 40,000 people’s experience of crime, shows that the volume of all types of offences , including violent crime, remained broadly stable during 2008.

The figures contain the first confirmation of Home Office projections that the economic recession and rise in unemployment are likely to be accompanied by an increase in some types of crime, particularly involving theft of property and burglary. The 4% rise in burglary, including domestic burglary, last winter comes on top of a similar increase between July and September and marks the end of a sustained 55% decline in burglary since the mid-1990s.

Home Office statisticians said the 25% rise in personal thefts reported by the British Crime Survey was statistically significant but it was too early to say whether it indicated a change in recent trends. They pointed out that it was not reflected in the police crime figures or other BCS categories of personal acquisitive crime.

The Association of Police Authorities described it as a “worrying development” that would be closely monitored so that any correlation with the economic downturn could be established and action taken.

The Home Office minister Vernon Coaker said: “We know that we are facing some new challenges now and are focusing our experience and knowledge to tackle these head-on.” He said ministers were already working with police, charities, DIY stores and insurers to target repeat burglars and help people secure their homes.

April is National Financial Literacy Month in the United States. In most cases, schools do not extensively teach financial skills. Teenagers, highly susceptible to messages from the media, often do not have guidance from teachers, who are not trained to teach financial skills, or from parents, many of whom do not model healthy financial behavior. This series of articles at Consumerism Commentary serves to help inspire discussion about basic financial concepts. Please feel free to forward this article to someone who might benefit from a basic financial overview.

This article covers the staple financial resource for anyone seeking long-term financial stability, the savings account. This is the third article in the Money Basics series; so far this series has covered checking accounts and savings accounts.

What is interest?

Interest is a fee paid for the use of someone else’s money. Any individual or company that lends money will charge the borrower interest, always designated as a percentage like 5%. This percentage is almost always means “per year.” The most common forms of interest appear in savings accounts, where a bank pays you interest for depositing your money in the account, and credit cards and other loans, where you pay a company for allowing you to use their money for a time. Hundreds of years ago, society frowned upon charging interest, but as lending money became more prevalent for uses other than acquiring goods such as modern commerce, the stigma of interest slowly disappeared in many cultures.

The two main forms of interest are “simple interest” and “compound interest.” Simple interest is easily calculated. If you borrow $1,000 from a bank that charges you 5% simple interest, you will owe 5% more than $1,000, or $1,050, at the end of the year if you do not borrow more and do not pay back part or all of the loan. The $1,000 is a “principal.” Multiply the principal and the rate of interest (5% becomes 0.05 when multiplying) to determine the amount of interest ($50). Adding the interest amount and the principal results in the total due after one year: $1,050. With simple interest, if you don’t pay the loan back until the end of the second year, you will have another $50 to pay for a total of $1,100. Your second year of interest is based on your original principal.

Compound interest is more common than simple interest, but there are many nuances. Say the bank charges 5% interest on that $1,000 loan, but it is compounded annually rather than not compounded (simple). At the end of the first year, the first year’s interest, $50, is added (compounded) to the principal. Your second year’s interest is then calculated based on your new principal of $1,050. 5% of $1,050 is $52.50, so rather than owing $1,100 at the end of the second year, you would owe $1,102.50.

If only life were that simple. Interest can also be compounded monthly, daily, or continuously. A 5% interest rate compounded monthly, paid to you by a bank in return for your $1,000 deposit, leaves you with $1,051.16 in your bank account at the end of the year assuming no further deposits or withdrawals. That is a little more than the $1,050 of simple interest or interest compounded annually. If that same 5% interest rate is compounded daily, your ending balance would be $1,051.27. Compounded continuously, the 5% rate would also result in $1,051.27, but a fraction of a cent more than the result of daily compounding.

Banks will usually describe their compounding method in the fine print, but this is only a minor concern for savings accounts, as I’ll explain below.

Don’t be misled by interest rates and terminologies

You would think that all financial terms would carry the same definitions regardless of the circumstances in which they are used. But there is some confusion when comparing interest rates for loans with interest rates for savings accounts. Indeed, there is further confusion when comparing savings account interest rates from one bank to another bank. Here are some tips for discerning the differences.

Loans, like mortgages, are often advertised by interest rate. But sometimes, a secondary rate, is also given. The first rate on the advertisement is the nominal interest rate and the second rate is the effective interest rate; the true cost of borrowing the money including the results of compounding as well as any fees that may be charged. Consider the mortgage loan advertisement I found online yesterday.

This ad lists an interest rate of 4.625% but the true annual cost is actually 4.879%. This advertiser calls the nominal interest rate the “rate” and the effective interest rate the “APR” (annual percentage rate), and this is common terminology for loans. Lenders are required to clearly display the true annual cost of a loan, the APR, but this often just leads to more confusion.

Unfortunately, savings accounts reverse part of this word usage pattern. A savings account’s APR usually refers to the nominal interest rate, and the true annual result, after compounding based on that particular bank’s method, is called the “APY” (annual percentage yield). For example, in our continuous compounding method mentioned above, while the savings account’s interest rate is 5%, the APY is closer to 5.127%. When banks advertise their savings accounts, they usually include the APY, leaving the nominal interest rate to be found only in fine print if anywhere. The APY is a standard metric that makes it easy to compare savings accounts across banks regardless of the type of interest, and I use APYs to compare high-yield savings rates here.

If you are thoroughly confused, you can always head to dinkytown.net, which offers calculators to help you determine a loan’s APR (true annual cost) if you know the loan’s (nominal) interest rate and fees and to help you compare how much more you would earn by switching to a savings account with a higher interest rate (APY).

Albert Einstein probably never called compound interest “the most powerful force in the universe,” though this quotation or one similar is often attributed to him. If you want to “get rich,” all you need is compound interest, preferably at a rate above inflation, and lots time on your side.

NEW YORK (Fortune) — Banks are socking away funds for future loan losses at a record clip. But at the sickliest institutions, problem loans are rising even faster.

On Monday, Bank of America (BAC, Fortune 500) became the latest big bank to report a stronger-than-expected quarterly profit, posting net income of $4.2 billion, or 44 cents a share. Analysts had expected a profit of just 4 cents a share.

Like its rivals Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Wells Fargo (WFC, Fortune 500), Charlotte-based BofA pointed to strong fixed-income trading results and a big rise in earnings from its mortgage business.

BofA managed to post the big profit even as it set aside more than $6 billion to cover future loan losses. The bank’s loan loss reserve now stands at $30 billion — double its year-ago level.
BofA expects more borrowers will fall behind on payments or default on their loans as job losses deepen and the economy struggles through its worst recession in decades.

“We understand that we continue to face extremely difficult challenges primarily from deteriorating credit quality driven by weakness in the economy and growing unemployment,” CEO Ken Lewis said in a statement Monday morning.

Yet as much money as BofA is putting away, both it and Citi — the two big banks that have received multiple infusions of federal aid over the past year — are reporting sharp rises in problem loans, particularly on their big credit card portfolios. BofA posted a $1.8 billion loss in its global cards business in the latest quarter.

These high credit costs could weigh on the banks’ earnings for many quarters — and perhaps even affect the regulatory stress tests whose results are due to be revealed in coming weeks.
Not keeping pace

While BofA has doubled its loan loss reserve, nonperforming assets — loans that are no longer producing income as borrowers fall behind on payments — have more than tripled, reflecting the weakening economy and the acquisition of troubled Countrywide and Merrill Lynch.

Police think it started with a dispute over an ex-girlfriend. Threats were made on social networking sites and via text messages.

The suspects, clockwise from top left are: Lernio Colin, Angel Cruz, Peter MacDonald and Christopher Harter.

A murder plot was hatched and, police say, in the early hours of last Saturday morning, a Florida man was gunned down in his car. But the suspects apparently killed the wrong man.

Now four men are in custody, and will face charges of first degree premeditated murder and two counts of attempted murder. The four are Angel Cruz, 23; his brother from Oregon, Christopher Harter, 29; Peter MacDonald, 18; and Lernio Colin, 20. They have all appeared before a judge in Fort Lauderdale, Florida.

They have not entered pleas and are being held without bond, according to state prosecutors.
Detectives are executing search warrants today, and much about the case is still not known.
“The victim was with two other males, in the vehicle,” said Mike Jachles of the Broward Sheriff’s Office.

“One of those men was the intended target,” Jachles told CNN.
Witnesses said multiple shots were fired, according to police. Henry Mancilla, 24 was sitting in the driver’s seat of a gold Mitsubishi Galant at an intersection in Lauderdale Lakes, Florida, near Fort Lauderdale.

“They were exiting the vehicle when shots were fired, striking Mancilla,” said Jachles. He was pronounced dead at the scene.

Mancilla was with two other men in their early 20s, Tony Santana and Nick Pappas. One of them was the intended victim, but police are not saying who.

“The four men acted in unison in planning and executing this murder. Mancilla was in the wrong place at the wrong time, and he ended up the victim,” said Mike Jachles.
The three victims said they had been “jumped” earlier in the evening by the same four men and fled the scene in a red Chevy Impala, according to a sheriff’s detective affidavit released Monday afternoon.

Later, a blue Chevy Silverado pickup truck belonging to the defendant Cruz drove up to the three men, according to the affidavit. The victims say they armed themselves with a baseball bat and a walking cane, when the truck turned around and drove towards them. That’s when the shots were fired.

Christopher Harter told police he was in the vehicle at the scene, but said he left the vehicle and then heard four or five gunshots, according to the affidavit. Harter also told police he saw his brother, Angel Cruz, in possession of a semi-automatic pistol three weeks prior to the incident.

“It could have been a case of mistaken identity, but our investigation will determine that,” Jachles told CNN.

Threats were posted on social networking sites and sent via cellular text messages by the suspects to the intended victim, said police. Police said they have not subpoenaed those records and are not releasing the names of those Internet sites.

Home Based Business Financing: A Business Cash Advance

If you’re looking for home-based business financing, a business cash advance may give you the money you need to operate and grow your business. Though it seems counter-intuitive, more business startups happen during a recession than in any other point in the economic cycle. People who have lost their jobs or need extra cash are motivated to start their own businesses, providing products and services that others want and need. Finding home based business financing can be a challenge though. Banks are wary of loaning money to those who are self-employed.

A business cash advance isn’t a loan; it’s a business loan alternative that make sense for small businesses and those businesses that handle a lot of credit card transactions. With a business cash advance, you sell a percentage of your future credit card transactions. As your customers pay for goods and services with credit, a portion of each sale is diverted to repay the business cash advance. The rest of the transaction comes back to you, so you can operate your business, maintain your inventory and pay bills.

The advantages of this business loan alternative are plentiful. First, there’s no monthly payment to make. You repay your business cash advance each time you process a credit or debit transaction. When your business is good, your repayment is accelerated, but when business slows down, so does your repayment. It’s a business loan alternative that makes sense in an uncertain economy.

With a business cash advance, there are no long application forms to fill out, no waiting to find out whether you’ve been approved, no collateral and no personal guarantees. You get the home-based business financing you need when you need it, and with a repayment plan you can easily manage. Contact Rapid Capital Funding today for more information about home based business financing and business cash advances.

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April is National Financial Literacy Month in the United States. In most cases, schools do not extensively teach financial skills. Teenagers, highly susceptible to messages from the media, often do not have guidance from teachers, who are not trained to teach financial skills, or from parents, many of whom do not model healthy financial behavior. This series of articles at Consumerism Commentary serves to help inspire discussion about basic financial concepts. Please feel free to forward this article to someone who might benefit from a basic financial overview.

This article covers the staple financial resource for anyone seeking long-term financial stability, the savings account. This is the second article in the Money Basics series; this first article covers checking accounts.

What is a savings account?

Like a checking account, a savings account is a service offered by a bank or credit union for the purposes of keeping your money safe, secure, and accessible. While the purpose of a checking account is to allow frequent transactions, through checks, debit cards, or electronic transfers, the purpose of a savings account is long-term holding. If you have predictable income and predictable expenses, and you aim to spend less than you earn, you should be left with extra money at predictable intervals. This extra cash is the perfect candidate for deposit into a savings account.

One important aspect of savings accounts should be mentioned up front, and I emphasize this because it was never brought to my attention until I received a nasty letter of warning from a bank at which I broke this rule: you may only make up to six withdrawals per month (or statement cycle) from a savings account. If you choose to break this regulation or otherwise neglect to acknowledge it, your bank may penalize you by charging you a fee, disallowing the transaction, or even closing your account.

Savings accounts also earn interest. Every month, if you do not withdraw from your savings account, your money will grow. By giving your money to a banking institution in the form of a savings account, you are allowing that company to lend a portion your money to businesses and other individuals. Banks pay you for granting this privilege through interest payments to you.

Why do I need a savings account?

Any money that you do not need for immediate and expected expenses within one month, but that you might need in less than a year should be deposited in a savings account. This is the perfect place for a good portion of your emergency fund, money that you will use to pay your expenses if your income were to unexpectedly disappear or if an unpredictable expense were to arise.

For a suburban teenager in the United States, the first major expense might be a car. If you are like many, the first car will be purchased used (or “previously owned” as the salesmen like to euphemize). As you earn money from working during spring break or the summer, put as much from your paycheck into the savings account as possible. The more you keep in the bank, the more interest you will earn.

How do I manage my savings account?

My girlfriend has a passbook savings account. Every time she visits the bank to make a deposit, withdrawal, or transfer from or to her checking account, she hands the teller a booklet about the size of a passport. The teller uses a special printer to record the new transaction, any transactions that have not been recorded since the last printing like earned interest or ATM transactions, and the current account balance. While old-fashioned, this is a convenient way of managing a savings account. As more transactions are performed electronically or otherwise without the aid of a teller, the passbook is falling out of favor.

The popular alternative to the passbook is to receive a statement, mailed from the bank, each month. Like with the checking account, I recommend keeping your own record of every transaction that takes place within your savings account. Computer software like Quicken will allow you to do this, and in many cases, automatically compare what you have entered with the bank’s own records once they are available.

Almost all banks now offer online access, as well. If you ever want to check your bank balances, not trusting what you have entered in Quicken, your bank will allow you to visit a website where you may pass a security test and be granted access to view your account online.

How do I choose a savings account?

If you have previously opened a checking account, you may wish to open your first savings account at the same bank. This will allow you to perform immediate transfers from your checking account to your savings account. The benefit is your money will begin earning interest much faster than if you transferred money from one bank to another. The unfortunate down side is that most brick and mortar banks offer low rates of interest.

For this reason, I suggest opening a second savings account at a bank that offers high-yield online savings accounts. This option did not exist much more than ten years ago. A number of new online-only banks have been established since the dawn of the World Wide Web, offering great products and services with low overhead costs, creating an opportunity for them to offer better interest rates. Not to be outdone, old-fashioned brick and mortar banks are determined to compete in this new environment and have established online-only subsidiary companies or simply created savings accounts to compete with these higher interest rates.

When choosing a bank account, the interest rate offered should not be the only factor you consider, but it should be one of the most important. Look for a history of offering competitive rates as well as highly-rated customer service and an online interface with which you feel comfortable. I have reviewed the best online savings accounts, and my favorites include FNBO Direct for its consistently high interest rates and ING Direct for its above average rates and customer service record.

Once again, work to avoid fees. Some banks, particularly the antiquated branch-based banks, want you to maintain a minimum balance every month in order to avoid a monthly fee, while others don’t offer this avoidance option. These rules can get tricky. Some banks want you to have a combined balance between your checking account, savings account, and possibly even a line of credit for avoiding a fee.

Another popular fee is related to software. I mentioned Quicken above for keeping track of your savings account, but some banks will charge you a monthly fee if you connect to your bank’s electronic records directly from the program. In 2007, Wachovia charged me a surprise $5.95 for using Quicken, as I had been for several years. The bank changed their policy for some types of accounts, but the policy wasn’t intended to apply to the type of account I had. I was able to talk to a customer service representative to have the fee removed and a note placed on my account that would supposedly prevent that fee from ever being charged to me again. You might be able to talk your away out of these fees as well, but it’s better to avoid them in the first place.

When you compare interest rates between banks, you should look for the annual percentage yield (APY), not the annual percentage rate (APR) of interest. This allows a fair comparison between banks thanks to differences in compounding methods. This and more about interest will be explained in further detail later within the Money Basics series.

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Money Basics: Savings Accounts

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A quick roundup of current lending news.

In December 2008 we reported a prediction that credit card issuers would be reducing available credit by about 45%, and recently the company behind the FICO score released a report of credit lines being reduced from April to October 2008, right before that prediction was made.

From the study, we find that lenders reduced credit for 16% of consumers, and 31% of those affected had a late payment, collections account or public record (e.g. bankruptcy, foreclosure, garnishment or tax lien). Disturbingly, the median FICO score of those affected was 770, a very good score. So, while a smallish minority of Americans were affected, they were the best customers of the bunch: good scores with few red flags.

The better news is that the average credit line was reduced only 5%, so all other things being equal, the FICO score of someone in this group shouldn’t have been negatively affected. We’ll have to wait and see, of course, what happens to FICO scores after October 2008.

Deceptive Credit Card Practices Update

We haven’t written about this since inauguration day, but it looks like there may be movement again soon on a bill promoting the credit card holder’s bill of rights.

Lawrence Summers, a White House economic adviser said on “Meet the Press” this past weekend that the president will be “very focused in the very near term on a whole set of issues having to do with credit card abuses.”

It’s also possible that instead of passing a new law, credit card issuers may make a whole set of promises during a meeting with the president and his team on Thursday.

Then there’s the issue that banks aren’t lending what they are supposed to be. From Reuters:

Credit card issuers have received over $120 billion in taxpayer funds since October, money the government has asked them to use to expand lending.

But with U.S. credit card defaults at record highs, lenders are trying to protect themselves by tightening credit limits and closing accounts, actions that have infuriated lawmakers, consumers, and even triggered a New York state attorney general inquiry.

Bailouts Not Working?

Put too simply: taxpayers loaned billions and billions of dollars to banks who had stopped lending money to those same taxpayers, in order to get them lending again. Overall, this doesn’t seem to be working when we see headlines like “Bank Lending Keeps Dropping” and “U.S. Banks Line Up to Repay TARP Money“.

Commercial and industrial lending were down in February, but I was glad to see that Home Loan Refinancing was up 42% from January to February. Home equity lines of credit were also being processed at levels typical for the season.

Similarly, Americans feel like this is a good time to buy a house. In fact, 71% of people responded that way, the highest level in four years.

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The State of Credit, April 2009

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Internet Business Financing: Business Loan Alternative

Many small entrepreneurs today are finding that even in the recession, there are plenty of opportunities for Internet businesses. What’s not widely available, however is Internet business financing that makes sense. A merchant cash advance can provide Internet based businesses with the business loan alternative they need to start or maintain their operations.

After 50 years of retail service, Austin and Warburton, a well-known local jeweler in Ann Arbor MI is calling it quits – on the retail side of their business. Instead, the owners will be taking their storefront operation online, where the opportunities are still plentiful, and the Internet business model fits in with their idea of where the jewelry-buying customers are going.

For traditional retailers, a shift in consumer shopping preferences and a weak economy have created plenty of businesses that are struggling to make ends meet. Shifting some business to an online operation can be a challenge, but Internet business financing is available from Rapid Capital Funding. You can open new revenue streams for your business with a business loan alternative from Rapid Capital Funding.

If your business accepts Visa or MasterCard, and generates at least $2,500 in credit and debit receipts each month, you’re likely qualified for a merchant cash advance from Rapid Capital Funding. Rapid Capital Funding will purchase a portion of your future credit card transactions, and you’ll get the Internet business financing you need to take advantage of retail business opportunities that exist now, and open new business opportunities.

Contact Rapid Capital Funding today and learn how a merchant cash advance can provide the business loan alternative you need to open your Internet storefront today!

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Financing For High-Risk Businesses: Try A Merchant Cash Advance

If you’re in the market for financing for high risk businesses, consider a instead of a high-interest loan. For small businesses that might otherwise not qualify for financing, a merchant cash advance may help you get the financing for high-risk businesses fast!

Rapid Capital Funding will purchase a portion of your future credit card transactions. In exchange, you get the capital you need to operate your business, expand, purchase new equipment or do whatever you need to do to make your small business grow!

A merchant cash advance isn’t a loan. There’s no collateral and no personal guarantees. Unlike the banks, Rapid Capital Funding will take a risk on your business, and without the long application and approval process a bank will put you through.

At Rapid Capital Funding, we know that operating a small business is tough, and finding the financing for high risk businesses can be even tougher. That’s why so many of our small businesses appreciate the ease and convenience of a merchant cash advance. As long as your small business accepts Visa or MasterCard, and generates receipts of as little as $2,500 per month, Rapid Capital Funding can provide financing for high-risk businesses like yours in just a matter of hours! Contact Rapid Capital Funding today and let us show you how a merchant cash advance can work for you.

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April is National Financial Literacy Month in the United States. In most cases, schools do not extensively teach financial skills. Teenagers, highly susceptible to messages from the media, often do not have guidance from teachers, who are not trained to teach financial skills, or from parents, many of whom do not model healthy financial behavior. This series of articles at Consumerism Commentary serves to help inspire discussion about basic financial concepts. Please feel free to forward this article to someone who might benefit from a basic financial overview.

This article covers the first type of bank account recommended for teenagers and others who are first becoming financially responsible. This is the first article in the Money Basics series.

What is a checking account?

A checking account is one of the most basic tools for establishing your financial identity. When I was a teenager, my parents took me to the bank to open my first checking account. I don’t remember the details, but I brought the money I had collected from my allowance and birthday gifts from relatives to the bank, and they gave me an account number and a book of checks. This checking account allowed me to keep my money safe as I saved money for large purchases. Every month, I received a statement describing all the money I brought to the bank, everything I took out of the account, and checks I wrote (if any). Banks won’t know about every check right away, so it’s important that you track this account yourself (see below).

The checks you write when you want to pay someone allow that person or business to take the money directly from your bank account. So if you want to use the allowance you have saved to buy a present for your brother, rather than going to the bank to take out the money you have deposited and carrying around bills and coins, you can write a check.

I mentioned the bank kept my money safe. Despite the popularity of bank robberies in the movies, it is unlikely for money to be stolen from a bank. It is more likely that cash left in my house would disappear, be misplaced, or be spent on things I didn’t need. The government helps out, too, by guaranteeing your checking account won’t lose your money.

What is a debit card?

Checking accounts have improved since I set up my first with my parents. Now, almost every bank will offer a debit card to go along with the checking account. This debit card lets you add cash to your bank account through an automated teller machine (ATM, or MAC machine). The card, which fits in your wallet and is usually made of plastic like a credit card, also allows you to withdraw cash from your account whenever you need cash. Some stores allow you to use your debit card to pay for the things you wish to buy instead of writing checks or exchanging cash.

Why do I need a checking account?

Any money you intend to spend soon should go into a checking account. When you open your first checking account, you may not have many bills to pay every month, like car insurance or rent. But you may want to buy birthday gifts for your friends and family, eat out with your friends, or in some cases, you may even need to help support your family. All of these will be easier with a checking account, checks, and a debit card.

If you have a job, find out about having your paycheck sent directly to your bank. This saves you the trip to the bank every week (or every other week) and allows you to receive the money in your bank account sooner. It also keeps your hands off the money so you don’t have the easier opportunity to get in your own way as you save.

How do I manage my checking account?

Banks will usually stop you from spending more money than you have in your bank account, but that is problematic when you write checks. If you write a check manually, your bank won’t know about it until the person or business who receives the check takes it to their own bank to deposit it or turn it into cash. So it’s very important to keep track of the checks you write so you always know how much money you have. If you mess up and try to spend money that you don’t have, your bank will charge you fees. These fees are completely unnecessary, so avoid them by keeping track of your money.

When you receive a check book, you usually receive a register — pages with grids. Within these grids, you should write down every transaction in your checking account. Each line includes a space for the date, a description of the transaction, and the amount. Your first line should be your opening deposit, the money you gave the bank to open your account. If you opened your account with $100 on April 19, 2009, your register would look like this:

If you decide to write a check on April 20 to buy a gift for a friend at Best Buy, your register might look like this:

As you can see, if you had $100 in your bank account at the end of April 19 and you wrote a check for $40 on April 20, your remaining balance is $60. Regardless of what your bank says, you only have $60 left to spend. At the end of the month, when you receive a statement from the bank, you can compare the bank’s records with your own, identifying which checks are still outstanding — not listed on the bank statement.

Keeping track of your checking account with this register was easy before debit cards and ATMs. But just as technology has made it easier to spend your money, technology has made it easier to track your money. I use Quicken on my computer because it works just like the register described above, but it automatically compares the bank’s records with mine.

How do I choose a checking account?

You should look for a checking account that does not charge you unnecessary fees. Most banks offer “student checking accounts” which have low minimum balances (if any) and no monthly fees. This is a good place to start. Student checking accounts are otherwise identical to regular checking accounts, and you can compare them by visiting a bank’s website or visiting a bank in person and asking questions. I suggest convenience, which can take several forms. You may want to choose the same bank that your parents use the most so you can combine trips to the bank when you have money to deposit. You could also choose a bank that has a branch location close to your house.

I suggest looking for an account that doesn’t allow you to “overdraw” your account. Overdrawing, which means taking more money from your account than you have available, can result in an overdraft fee. The bank will take your money from you as a penalty if you try to spend more than you have. Ask the bank about setting up your account to stop your debit card from working if you don’t have enough money. But the bank can’t do anything if you write a check and don’t have enough money in your account. If you write a check without enough to cover it, the check will bounce, and you will still be charged a fee.

Besides the regular or student checking account, you should know about two other types of checking account. Interest-bearing checking accounts allow you to increase your bank balance without doing anything. The bank pays you a small amount of interest every month in return for you giving them your cash. This sounds like a good deal, but it usually comes with certain restrictions. You may need to maintain a high balance in the account to earn this interest, the bank may charge you a fee, or a combination of the two. In most cases, savings accounts offer better deals than interest-bearing checking accounts.

The last type of checking account is gaining popularity. The paperless or electronic checking account, also called a bill payment account, eliminates the use of a checkbook. You will not write checks for these accounts, so you lose some flexibility to pay for a purchase if debit cards are not accepted. But you will be able to send checks to other people and businesses by visiting your bank’s website and entering the recipient’s appropriate information. The bank then sends a check electronically or through the mail and keeps a record of the payment online. I have an account like this at ING Direct.

This is the first article in the Money Basics series. Look for more from Consumerism Commentary about savings accounts, credit cards, debt, and interest.

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Money Basics: Checking Accounts

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