To err is human...and sometimes it can be expensive. With summer winding down, many consumers may be left in a wake of fees from checking account mistakes they may have made during their summer whirlwind.

If that has happened to you, you are not alone. According to the 2004 Federal Reserve Payments Study, 18 million checks written each year end up bouncing.

The Stephenson National Bank & Trust (SNBT) wants to share some suggestions to avoid some common mistakes. By following these tips you may enjoy a more satisfying banking relationship and keep more of your cash.

Bounced checks may come back to haunt you

Many people write checks or use debit cards without paying attention to their account balance. To cover the costs of processing and reversing overdrafts, banks charge an overdraft or insufficient fund (NSF) fee, whether it is from writing a check, using a debit card, or at the ATM. This fee may vary from $20 to $35 for each overdraft.

If a check is returned to the retailer, they typically add their own $25 to $30 fee – but the costs may not stop here. The retailer may send your previously returned check back to the bank for a second time. If you still do not have sufficient funds in your account, this may result in a second NSF fee. Thus the total charges you incurred may be $45 to $70 or more, and the check still has not been paid.

Overdrawing your account can cost you more than just money

Be aware that bounced checks may become part of your financial record. There are companies that monitor and report how you manage—or mismanage—your accounts, similar to the way credit bureaus keep track of how you handle credit. A bounced check, if reported, may stay on your record for as many as seven years.

As some consumers have learned, even a single bounced check reported by one of these services may be enough for a retailer to refuse your checks. In addition, if your account is closed by the bank because you repeatedly failed to repay insufficient funds, you may have difficulty opening a new account elsewhere.

How to avoid overdrawing your account

Mistakes happen. It is understandable that on occasion, a person may overdraw their account due to common mistakes. Here are ways to minimize the likelihood of errors:

•  Keep your check register up-to-date and know your account balance. Deduct all withdrawals, not only checks — don’t forget automatic bill payments, ATM transactions, bank fees, debit card purchases and online payments.

•  Be aware that not all transactions are processed immediately and may be reflected in your account balance at different times. Therefore, do not rely on ATM receipts for your balance, as they do not reflect outstanding transactions not yet processed.

•  Review your monthly statements as soon as they arrive in the mail or check your account information between statements online or by telephone. Over half of consumers (59 percent) check their account balance at least once a week, according to a 2004 ABA Consumer Survey.

•  Do not rely on “float” (the time it takes for a check to clear).  As a result of technological advances, check clearing time has decreased dramatically.

•  Before closing your checking account, make sure all outstanding checks have cleared and account fees have been paid.

Options to protect you from bouncing checks

No one likes to bounce a check. For the occasional accounting error, consumers like the reassurance of overdraft protection programs. Overdraft protection programs are available for an emergency, and they should be used accordingly.

“Consumers appreciate banks covering their overdrafts,” said David C. Meyer SNBT Senior Vice President and Chief Financial Officer. “They avoid the inconvenience, embarrassment and potential costs of having a payment or transaction rejected.”

•  An "occasional overdraft privilege service" is a program that is applied at the bank’s discretion. With this type of plan, you’ll still pay an overdraft fee to the bank, but it can save you added fees imposed by the retailer, as well as interest and late fees. Plus, you’ll stay in good standing with the people with which you do business.

•  A “transfer service” links your checking and savings accounts. If you bounce a check, the bank transfers funds from your savings account to your checking account for a minimal transfer fee.

•  An “overdraft line of credit” is a program you need to apply for just as you would a regular loan. If you overdraw your account, the bank lends you the funds by using your line of credit. You will pay interest on this loan, and there may be an annual fee, but the overall costs may be less than the cost of an overdraft.