10 Checking Account Mistakes That Young Adults Make

As a young adult, managing a checking account is one of the first steps toward building a strong financial foundation. However, many young adults make common mistakes that can lead to unnecessary difficulties.

Whether you’ve just opened your first account or are looking to improve your banking habits, it’s important to be aware of potential pitfalls. Here are some of the most frequent mistakes young adults make with their checking accounts and how you can avoid them.

1. Not keeping track of your balance

One of the most common mistakes young adults make is not regularly monitoring their checking account balance. Without checking your balance often, it’s easy to forget about pending transactions, which can lead to overdrafts.

Make a habit of checking your balance regularly, either through your bank’s mobile app or by reviewing statements. Many banks also send out balance alerts or notifications for transactions, which can be helpful for staying on top of your account activity. Setting up a budget that accounts for your regular expenses can also help you stay within your limits.

2. Ignoring fees

Another mistake is not being aware of the fees associated with your checking account. Many checking accounts come with maintenance fees, overdraft fees, and ATM fees that can add up quickly if you’re not careful.

Take the time to understand the fees associated with your account. If your bank charges monthly maintenance fees, see if you can avoid them by maintaining a minimum balance or setting up direct deposit. Some banks also offer accounts with no fees or lower fees, so if you’re being charged unnecessarily, consider switching to a better account.

3. Overdrawing your account

Overdrafting occurs when you spend more money than is available in your account. When this happens, banks usually charge a hefty overdraft fee and may also allow the transaction to go through, putting you in the red. This can quickly spiral into debt if not managed.

Set up account alerts to notify you when your balance is low. You can also opt for overdraft protection, which links your checking account to a savings account or credit line, covering the difference if you overdraw your checking. Many banks also offer accounts that don’t allow overdrafts, ensuring you can’t spend more than you have.

4. Not using online banking tools

Many young adults don’t take full advantage of online and mobile banking features. These tools can make managing your checking account easier and help you stay on track. Without them, you might miss out on budgeting features, mobile check deposit and easy transfers between accounts.

Get familiar with the mobile banking app offered by your bank. Use mobile banking features to manage your finances. Most banks also offer transaction alerts, so you can get real-time updates on your spending.

5. Not having a backup plan for emergencies

Relying solely on your checking account for everyday expenses is a mistake, especially if you don’t have a financial cushion to fall back on in case of emergencies. Without an emergency fund, a single unexpected expense could lead to financial stress.

Consider opening a savings account or setting up a separate account specifically for emergencies. Aim to build an emergency fund that covers three to six months of living expenses. This way, if an emergency arises, you won’t have to rely on credit cards or overdrawing your checking account.

6. Failing to keep track of subscription services

Many young adults sign up for subscription services like streaming platforms, gym memberships or online shopping services, but forget about them after a while. These services can automatically withdraw from your checking account, and without keeping track of them, you might end up paying for things you no longer use.

Regularly review your bank statements to check for recurring charges. If you see a subscription you no longer need, cancel it right away. Some apps can even help you track and manage subscriptions, ensuring you’re not paying for anything unnecessary.

7. Choosing the wrong account for your needs

Many young adults open a checking account without fully considering the features they need. For example, an account that offers limited ATM access might not be ideal for someone who needs frequent cash withdrawals. Similarly, some checking accounts charge fees unless certain conditions are met, such as maintaining a minimum balance.

Before opening an account, evaluate your spending habits. If you frequently need cash, look for an account with free access to a broad ATM network. If you struggle to maintain a balance, consider a student account with no minimum balance requirement or one that waives fees for students or young adults. Take the time to compare different accounts and choose one that aligns with your needs.

8. Not protecting your account from fraud

Unfortunately, fraud and identity theft are becoming more common. Not taking the necessary steps to protect your checking account can put you at risk of losing your money and personal information.

Use strong, unique passwords for your online and mobile banking accounts. Enable two-factor authentication (2FA) for an extra layer of security. Additionally, make sure to regularly monitor your account for any unauthorized transactions and report them immediately to your bank. If you’re using public Wi-Fi, avoid accessing your bank accounts to reduce the risk of hackers intercepting your data.

9. Forgetting to reconcile your account

Reconciling your checking account involves comparing your bank statement with your own records (such as receipts or transaction logs) to make sure they match. Neglecting this task can lead to confusion, and you might miss mistakes or unauthorized transactions.

Take a few minutes each month to reconcile your account. You can do this by comparing your account balance with the statement your bank provides. If there’s a discrepancy, investigate it to ensure there are no errors or fraudulent charges.

10. Relying too heavily on credit

Using a checking account as your primary way to store money and managing credit cards for most purchases can lead to debt. If you constantly rely on credit to get by, it’s easy to rack up high-interest balances and risk damaging your credit score.Use your checking account for everyday spending, but try to avoid using credit unless absolutely necessary. Build a budget that keeps you within your means, and only use credit for larger purchases that you can pay off quickly.

Avoiding checking account mistakes as a young adult

Managing your checking account wisely is key to maintaining financial stability as a young adult. By staying on top of your balance, avoiding unnecessary fees and protecting yourself from fraud, you can prevent costly mistakes. Developing good habits early on—such as setting up an emergency fund, using online banking tools, and carefully choosing the right account for your needs—will help you build a strong financial foundation for the future.

Disclaimer: Article content is intended for information only. It may not reflect the publisher nor employees’ views. Consult a financial professional before making financial decisions. Publishers or platforms may be compensated for access to third party websites.

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