Overdrawn Again?!
One of the most prevalent issues (and coincidentally the worst part of my job) is overdrafts. I can’t tell you how many different people come in every day, not understanding why their account is overdrawn. I hear, time after time, how they really weren’t overdrawn but got charged anyway. Obviously banks don’t charge overdraft fees just for the heck of it.
Sometimes it’s truly a bank error (teller misposted deposit or withdrawal, etc) but 99% of the time it’s the customer’s error. Besides keeping a fantastic check register (I’m so crazy about mine I check it every day), there are some other tips you can use to ensure you don’t go overdrawn.
1. First and foremost, keep a good check register. Obviously if you aren’t keeping track of your money, how are you going to know how much money you truly have?
2. Don’t use online banking or telephone banking as the only means of keeping track of your account. Online banking and telephone banking don’t know of any checks you’ve written or check card purchases you’ve made that haven’t been put through your account yet. Online banking should only be used as means to double check your check book.
3. Items can “pend” in an account for up to three days (my bank’s policy). I’ve seen numerous instances where items will pend for one day and then disappear the next. This happens occasionally, and if you are only using online banking to keep track of your account, it can really mess you up. You’ll log on to online banking one day, see the item pending, log on again the next day, see it’s not pending, and then think you’ve got more money than you actually do.
4. Balance your statement each month. I know it seems old fashioned especially in this digital age, but it’s the only way to know a merchant hasn’t charged you twice or the wrong amount or even notice if there’s been fraud on your account.
5. Know your bank’s funds availability process. This is one of the most important tips. For instance, when I make a deposit, the funds from that deposit aren’t available until the next business day. I advise customers to not write their deposits into their checkbook until the next day. Many times customers will come in telling me they never went negative but still got overdraft charges. It’s possible. We call that “uncollected funds”.
Those are the most important words of wisdom I can give to avoid the red. What is your most important tip to avoid overdrawing your account?
The one time I overdrew my account, it actually was a bank error. Whew! We had just set up automatic bill pay from my checking account to our car loan (also with that bank).
I told them to link it to our main checking; they linked it to our secondary.
I saw the charge and they corrected it and refunded the fee.
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One I try to keep a buffer in my account, I never take it down to empty. I don’t keep a good check register but I do check my budget regularly, as I spend money I change the color of the cell in the spreadsheet. I then reconcile it against the online balance. Another tip is to keep a savings account attached to my checking account, I can quickly move money over if I’m getting low.
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I also keep a buffer in my account, plus have it linked to a CC so I won’t bounce anything. I know people who think that their online balance is the money they have available. They just don’t process that not all transactions are instantaneous. Scary.
My tips: link the checking to a savings or a CC. AND/OR: make a fake withdrawl from your checking and then forget about it. That way you will have a buffer in case you miscalculate.
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Kacie- Bank errors do happen every once in awhile. I am glad they got it fixed for you!
Miss M & K-Money- I like the idea of having a buffer. Before I got my overdraft protection, I used to do that. It doesn’t hurt!
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