Which of the following strategies is the best way to avoid paying extra fees to a bank?

• A. Ignoring monthly bank statements and only checking your balance online occasionally.
• B. Writing checks without keeping track of your account balance.
• C. Relying solely on the bank's records without maintaining your own financial records.
• D. Regularly reconciling your bank statement with your own records to identify and resolve discrepancies promptly.

Answer: (D)

Verified step by step guidance

1. Understand the concept of bank reconciliation: Bank reconciliation is the process of comparing your own financial records (such as a check register or accounting software) with the bank's records (monthly bank statements) to ensure accuracy and identify discrepancies.
2. Recognize the importance of reconciling regularly: Regular reconciliation helps you identify errors, unauthorized transactions, or fees that may have been charged incorrectly, allowing you to address them promptly.
3. Learn how to perform a bank reconciliation: Start by gathering your financial records and the bank statement for the same period. Compare each transaction listed in your records with the transactions on the bank statement.
4. Identify discrepancies: Look for differences such as missing transactions, incorrect amounts, or fees that you were not expecting. Investigate these discrepancies to determine their cause.
5. Resolve discrepancies: Once discrepancies are identified, take appropriate action, such as contacting the bank to dispute unauthorized fees or correcting errors in your own records. This ensures your financial records are accurate and helps avoid paying unnecessary fees.