How You Can Avoid Paying Overdraft Fees

In our current economic environment, money is tight and budgeting is ever more important. I recently met with a customer service representative at my bank to ask her a few questions.

In general, has the bank seen an increase in account overdrafts?

Has there been a surge of new customers overdrawing their accounts (not including the regular culprits)?

She answered yes to both questions. Banks typically have repeat customers who overdraw their accounts on a regular basis. She stated that the number of overdrafts for these customers has somewhat increased, but more noticeably are the number of customers overdrawing their accounts that normally do not.

So how can you save money by keeping your bank account in the black and avoid costly overdraft fees? There are several methods and most often your bank can provide you with the guidance you need.

The obvious answer is not to spend more than you earn. But this can be easier said than done. Most banks process their transactions electronically now. This means your payments, checks included, are clearing faster. When your credit card bill is due two days before your automatic payroll deposit, don’t assume that the deposit will hit your account first. Some transactions, again including checks, have the capability of posting on the same day you issue them.

Let’s look at some of the available options.

Overdraft Protection. This is a great backup protection plan. If an item clears your account and the funds are not available to cover it, your overdraft protection will kick in, usually in $100.00 increments. Overdraft Protection Plans are considered revolving lines of credit. Once funds are accessed, a minimum payment will also be deducted from your account on a monthly basis until paid in full. Or you may choose to pay off the balance at any time. There is interest attached to these plans, but only when you draw from the reserve. Keep in mind that the interest paid is usually far less than any overdraft fees you may incur. You may also need to complete a credit application and qualify for this product. Check with your financial institution about the particular overdraft protection plan they offer. Product guidelines will vary from one bank to another.

If your credit is less than stellar, there may be another option available called a Savings Overdraft Protection Plan. With this product, you simply fund your own reserve via a savings account and you authorize the bank to withdraw from it on your behalf should your checking balance fall negative. Typically, authorized withdrawals are in $100.00 increments, the same as a consumer overdraft protection plan. Instead of paying interest and having monthly payments taken from your checking account, many of these plans incur a flat fee each time the funds are accessed to cover your overdraft. Of course, if the funds are not available in the savings account, this will not prevent you from overdrawing your checking account. Check with your bank, as not all financial institutions offer this product and product guidelines will vary from one bank to another.

The Self Approach. If you can be diligent in doing so, you can create your own overdraft protection plan. All you need to do is “hide” money in your checking account. You can build up this reserve over time by simply reducing your available balance in your check register. Ask your banker for an extra blank register and use it to keep track of your “extra” money. If it’s not visible in your main register, you’ll never miss it and you won’t be tempted to use it.

Tracking is easiest if it is done in even increments. For example, If your true balance is $750.00, you would show $650.00 in your regular use register and $100.00 in your hidden funds register.

Having hidden money tucked away, yet still in your account helps to cover accounting errors or transactions you may have forgotten to record.

By following one of these methods, you can avoid overdrafts and the costly fees associated with them.

According to Reuters.com, in total, banks and credit unions charge over 37 million dollars annually for overdraft fees. The average person overdraws their account 12 times per year, paying an average of $368 in annual fees. The average household pays an average of $1,472 in NSF fees annually. In this economy, I’m sure everyone would agree that that money could be better used in the consumer’s pocket.

New Job? Start Saving Money Now!

Congratulations – you have a job! Your first full or part-time job can be exciting, overwhelming and scary…all at the same time. The biggest benefit is of course having a real paycheck! Before you run out and spend that entire first paycheck, there are a few wise financial “first moves” you should consider.

1) Decide to save. Saving is just making the decision that instead of spending all the money you have, you put some aside for later use. You can save some money and keep it at home, or put it in a savings account at a local bank or credit union. There’s no denying that saving is a discipline. If you remember how saving will benefit you, it will be easier to make it a financial priority. Start small, with just even $10 a paycheck or a little bit of money from a bonus or gift. If you get paid twice a month, then by saving $10 from each paycheck you’ll have saved $240 by the end of the year. If you keep to that for 5 years you’ll have $1,200!

2) Make time work for you. Being young and just starting out you have one huge factor working in your favor when it comes to money: time. If you make the decision to save now for your future you’ll have to save a lot less of your income because you can make that income work for you and earn money that will grow at a much greater rate than if you began saving even just 10 or 15 years from now.

For example, if you began saving $100 a month at age 25 by the time you turn 65 you’ll have earned over $630,000. But if you waited until you were 45 to begin saving $100 monthly you’ll only have accumulated a little less than $76,000. That’s a $554,000 difference!

The younger you begin saving and investing, the more you’ll benefit from the magic of “compounding.” What’s compounding? Simply put, compounding is when your money begins to earn money on its own.

Let’s say you invest $100 in an account that earns you 5% interest. Interest is the money that the bank is going to pay you because you invested your money with them. So at the end of the first year you’ll have your $100 PLUS your $5 interest. Year 2 you’ll start off with $105. Now you’re earning interest on your original $100 and the $5 interest you earned. When you begin to see interest compound on a larger scale the money can really add up.

Once you start building up some savings, look around and compare what type of interest rates you can get for investing your money. You might want to consider starting out with investments such as CDs, bonds, and money market accounts that offer a fixed-rate of interest.

Return to Top

3) Create some goals. Write down 1-2 money-related goals for the next 5 years. Having a goal gives you something tangible to work toward and can help you stay disciplined when it’s tempting to spend instead of save. Maybe your goal is to take a fun vacation with friends, or buy a car, pay off your student loans, or buy a home. When you have a concrete goal, or set of goals, in mind it’s easier to create a plan for reaching that goal and be motivated to stick to it.

You’ll increase your chance of actually reaching your goal if you break it down into smaller, more manageable steps. For example, if your goal is to buy a car, decide when you’d like to be able to buy a car. Write that date down (i.e. month and year). What kind of car would you like to buy? Write that down and begin doing some research online or through magazines like “Consumer Reports” at your local library, or even talking to your local dealerships to see what kind of monthly car payment you’ll be looking at. Shop around for car insurance (which you’ll be required to have before you can drive that new car off the lot). Determine where you can get the best deal. As you cross off each step and save while you work toward your goal, reward yourself. Sometimes just seeing the progress you’re making can feel like a reward in itself.

Return to Top

4) Sign up for your employer’s 401(k) savings plan. Sure, something called a 401(k) plan doesn’t sound very sexy, but did you know it’s one of the fastest and easiest ways to save for your retirement?

When you sign up for your company’s 401(k) plan you’re allowing them to take a certain amount of money out of your paycheck and invest it in a retirement plan account (such as a mutual fund) to earn interest for your retirement. Often companies will match a portion of your contribution – meaning that, for example, they will put $.50 in your account for every $1 you contribute. Not all employers offer matching funds, but if your company does then when you sign up for your account, you’re actually getting free money toward your own retirement!

By opening a 401(k) account your savings are automatically deducted from your paycheck, which makes saving for retirement more convenient for you…if you don’t see it, you can’t spend it! Not to mention, the amount that you contribute is taken out of your paycheck before taxes. That means that your overall taxable income is reduced, meaning that you get to take home more of your paycheck.

5) Direct deposit to savings. Sure, we all say that we want to save money. But when it comes right down to it, it’s hard to make the choice to save instead of spend. That’s where having direct deposit comes in handy. You can have your bank withdraw a pre-set amount of money each paycheck and deposit it directly into an account of your choice. So if it’s hard to make that decision on your own, by opening a savings account or IRA (individual retirement account), and having even a very small amount deposited from your paycheck on a regular basis you’re beginning to create a solid savings fund that you can use to invest later.

6) Budget, Budget, Budget. Ugh. The dreaded “b” word. Unfortunately the idea of budgeting has gotten a bad rap. Instead of picturing a budget like a pair of handcuffs it can help to realize that creating and sticking to a budget can actually give you financial freedom. How? Well, budgets give you an accurate “snapshot” of how you’re doing financially. When you’re able to see how much income you actually have coming in and what your financial obligations, or debts are, you can figure out where you can create savings for your future goals.

7) Get health insurance. Having adequate health insurance can be one of the wisest financial moves you make. Why? Well if you know anyone who’s taken a trip to the emergency room lately they can tell you that health care costs can add up. And if you don’t have any insurance, those fees are going to come straight out of your bank account. A major accident or illness could even push you into bankruptcy. If your job offers health insurance, sign up because group coverage is almost always cheaper than buying an individual plan. If you don’t have employer-sponsored health insurance, you can still buy individual health insurance.

Using Math To Help You Save Money

Whether you were good at math in school or not, you can make math work for you…and not necessarily the way you think when it comes to money.  The simple basics of addition, subtraction, multiplication and division can help change your outlook and habits when it comes to managing money.

Add.  Instead of trying to completely overhaul your financial lifestyle, just add one positive discipline at a time.  For example, consider not doing anything different other than starting to save just $5, $10 or $50 a week…whatever is reasonable for you to begin saving on a regular basis.  Even if it’s just putting the money in a jar, seeing the money add up can be incentive to then take the next step.  Other suggestions to help you add one manageable financial discipline to your life at a time:

  • Complete a budget worksheet to get a good start on getting a picture of what your financial life looks like right now.
  • Pay your credit card bills on time and try to pay them in full or pay more than the minimum.
  • Balance your checkbook once a month.
  • Keep your receipts in an envelope and add them up once a month to see what you’re spending.  After a few months take a second step and evaluate your spending on a monthly basis.
  • Take lunch to work instead of eating out.
  • Buy yourself a coffee maker and travel mug and make coffee for yourself before heading out the door in the morning.
  • Try shopping at a less expensive grocery store for a month.
  • Look into paying your bills online through your bank and save the money of postage for mailing payments.
  • Empty your pocket change into a jar and at the end of the month take it to a change machine to see how much you’ve saved.
  • Consider having a small set amount automatically deducted from each paycheck and deposited into a designated savings or retirement account.
  • If your employer offers a 401(k) or 403(b) retirement savings plan and you’re not currently participating in it, ask the human resources department at your work place for information on how to sign up.  Then take a second step and sign up to begin participating.

Subtract.  Allow yourself to subtract, or “lose,” your fear of managing your finances.  Sometimes just getting back to the basics can help loosen fear’s grip.  At its most basic, managing your money is about four simple things:

1) Knowing how much you earn

2) Keeping track of how much you spend

3) Trying to spend less than you make so you can save money

4) Investing your savings to make more money for the future

The next time you begin to feel anxious, remember that you CAN do this if you take it just one small step at a time.  Implementing just one small, positive change in your financial life at a time (see tips in “Addition” above) will boost your confidence that you can lessen the fear of taking control and managing your money.

Multiply.  It can be easier than you think to multiply what your money can do for you.  Compound interest – when your interest begins earning interest – can help your savings multiply even faster!

For example, if you have some savings at home, look into opening an interest-bearing checking or savings account that will pay you a little bit each month for keeping your money in the account.  If you have an interest-bearing account, check to see how much interest you’re currently making.  Consider whether you could make more interest by moving your money to another type of account.  Other ideas for multiplying what your money is currently doing for you:

  • Check to see if your credit cards offer rebates or points toward items that you would likely purchase. Visit www.cardweb.com to see what interest rates and incentives other credit cards offer compared to the cards you’re currently holding.  Be wise when selecting a card.  Look first for a low interest rate and review the terms and conditions.  Don’t just pick a card based on the potential bonuses you could accrue by using the card.
  • Look into Flexible Spending Accounts (FSA) that your employer may offer.  By setting up a healthcare or dependent care FSA, you can have a pre-set amount of money automatically deducted from your paycheck pre-tax and deposited into an account that you can use for qualified expenses (such as doctor visit co-pays or prescription costs under a healthcare FSA or daycare costs under a dependent care FSA).  Using an FSA benefits you in three ways: (1) the money is withdrawn from your paycheck pre-tax so you’re lowering the amount of pay that you’ll be taxed on; (2) you’re getting into the discipline of automatically creating savings for yourself and your family; and (3) you’re putting aside money that you can use to pay for future expenses instead of having to charge expenses or take money from other savings.
  • If you have multiple retirement accounts or savings vehicles consider talking with a financial professional about whether consolidating your accounts could reduce paperwork and the time necessary to keep track of them and possibly increase the money you can earn by compounding interest on a larger pool of savings
  • Donate gently used clothing, household items, etc. to a local non-profit organization or charity.  By doing so you will be reducing your clutter, helping someone else and you will get a tax deduction for your donation)

Divide.  One of the biggest obstacles to managing money is time.  Many people feel like it simply takes too much time to keep records and research potential ways to save or invest.  As with achieving any big goal, it helps to divide the job into manageable portions.  For example:

Sample Money Management Schedule

Week 1:  Set aside 30 minutes to pay bills and file bills/statements after they’re paid.

Week 2:  Schedule 30 minutes to update your checkbook with the deposits and withdrawals.

Week 3:  Schedule 30 minutes to enter earnings and savings in a budget worksheet and see how you’re doing with current spending and savings compared to your budgeting goals.  Note a few small changes you could make to bring yourself closer to your target financial goals.

Week 4:  Schedule 30 minutes to review monthly bank and/or investment statements.  Read the fine print!  Make notes about questions you have or changes you might like to make. Then contact your financial professional.

By dividing the big job of “handling finances” into four thirty minute tasks per month you can begin to get a better handle on managing your money in just two hours a month!

Four simple tips can help you organize your financial life and improve how you approach handling your finances:

ü      Add one small, positive financial action to your lifestyle at a time.

ü      Subtract fear from the money management process.  Stop telling yourself there is nothing you can do to improve how you manage your money.

ü      Multiply what your money can do — investing savings in interest-bearing accounts and participating in plans (i.e. 401(k), FSA plans), for example, enable you to save money, lower your taxable income and invest for your future.

ü      Divide up the job of managing your money into smaller tasks.

Add, subtract, multiply and divide.  Let the basics of math help you get a fresh start toward a secure financial future!

 

Stop Bouncing Checks… Tips To Help Keep Your Account In Order

If you’re like most people with a checking account, chances are you have bounced at least one check in the past. “Bouncing” a check – meaning that you wrote a check for more money than you had in your account – is at the least embarrassing and at the worst, possibly a very costly financial mistake. But bouncing a check is just one way that you can overdraw your account. You can also:

  • make a debit card purchase
  • make an ATM withdrawal or
  • make an automatic bank payment to

If you try to overdraw your account using a debit card, automatic bank payment or by ATM withdrawal those transactions may simply be denied. If you write a check for more than you have in your account your bank may simply return the check to the store or person to whom you wrote it marked “insufficient funds.” In that case your bank would charge you a fee for the transaction AND the person or company to whom you wrote the check may also charge you a returned check fee.

Another possibility, however, is that your bank would pay the check using something called overdraft protection.

A new federal law enacted July 1 concerning overdraft-protection plans may affect how your bank reacts –and what it could cost you – if you bounce a check or overdraw your account. Most banks have two ways of handling customers who overdraw their accounts: courtesy bounced-check protection and traditional overdraft protection plans. Let’s look at both.

  • Courtesy bounced-check protection. Most banks automatically extend some form of “courtesy protection” for accountholders who bounce an occasional check or overdraw their account another way. Your bank will cover your check (meaning pay the store or person to whom you wrote the check), but will then charge you an overdraft fee for each item – meaning each check presented, bill paid or debit card transaction. And banks typically set a limit on the total amount that your account can be overdrawn – for example, $300, $500 or $1,000 – including fees. In addition to the overdraft fee your bank may also charge a small daily fee ($5 – $15) for every day that your account is overdrawn. Bank rules vary so be certain you know how your bank handles bounced checks and what automatic protections, if any, you have through your account.
  • Traditional overdraft protection plan. A traditional overdraft protection plan is actually a line of credit or loan that you have to apply for with your bank. When you are approved, any amount that you overdraw your account would be covered with funds available through your line of credit. You will then need to pay interest on the loan and possibly an annual fee. It is important to remember that this is a loan. While it may be less expensive than risking mounting fees through courtesy bounced-check protection, it is still a loan that requires your application, approval and will cost you money in interest and possibly fees.

New rules enacted July 1 require that banks disclose their total fees and charges for overdraft protection (whether it’s courtesy protection or through a traditional overdraft plan) when customers open an account and in periodic account statements customers receive either electronically or by mail. In addition banks are prohibited from using possibly misleading advertising regarding their overdraft protection for bounced checks.

Whether you are considering opening an account for the first time, or if you already have a checking account, be clear about your bank’s overdraft policies and options for ensuring that you pay the least amount possible for accidentally overdrawing your account. Specifically, ask a bank teller or customer service representative:

  • How will I know when I have overdrawn my account? Will someone from the bank call or email me the day that I overdraw the account? Will my ATM withdrawal or debit card transaction alert me that I am about to overdraw my account so that I have the choice to cancel the transaction? Will I be alerted electronically when an automatic bill payment would cause me to be overdrawn? Will I get a notice in the mail before I am charged for the overage?
  • If I bounce a check, or otherwise overdraw my account, how long do I have to deposit money into the account to cover the cost?
  • If someone presents a check I have written and there’s not enough money in my account, do you provide courtesy bounced check protection so that you will pay the person, store, to whom I wrote the check OR will you return it unpaid to the payee marked “insufficient funds,” and then charge me for the bounced check?
  • If you do provide courtesy bounced check protection, what penalties do you charge for the protection — individual item fees, daily fees, etc.?
  • Do you allow me to overdraw cash from my account using my ATM card? What penalty is there for doing that?
  • Do you allow me to make purchases using my bank debit card for more than I have in my account or would the purchase be denied? What is the penalty for doing that?
  • Do you report any bounced checks or overdrawn account activity (either by debit card or ATM) to the credit bureaus?
  • Are deposits credited to my account on the same business day? If not, how long will it take to post a deposit to my account?
  • If I apply for an overdraft line of credit what interest rate would I be charged for money used from that line of credit to cover any bounced checks or overdraws?

In addition to courtesy bounced-check protection and traditional overdraft lines of credit, there are other options to covering the “gap” created when you accidentally overdraw your account. For example you could:

  • Link your savings account to your checking account. That way if you overdraw your checking account your bank could automatically transfer funds from your savings account to cover the difference. Ask a bank representative if it offers this option and, if so, what fees it charges for the service.
  • Link your checking account to a bank credit card. Some banks will allow customers to link their checking accounts to a bank-issued credit card (for which you will have to apply and be approved for). Then if you overdraw your checking account that amount would be applied as a cash advance against your credit card. Be very careful, however, because you will have to pay a cash advance fee on the card and interest on the charge, and interest rates for cash advances are typically much higher (19% and higher) than interest charged on purchases.

While it can provide some peace of mind to know that you have a something in place to cover an accidental overage (like courtesy bounced check protection, linking an account to a credit card or savings account or having an overdraft line of credit), it is not substitute for carefully monitoring your account, balancing your checkbook and ensuring that you do not overdraw your account. Anytime you overdraw your account you are going to have to pay more for the transaction because of fees, penalties and/or interest. That money can add up very quickly and create a cycle where it becomes difficult to work your way back out of a negative checking account balance. Deposit money in your account as soon as you are aware that you have overdrawn the account to prevent mounting fees and penalties.

To avoid the future possibility of bouncing a check be sure to:

  • Enter all checks, ATM withdrawals and deposits (and ATM fees!), online bill-paying fees, and debit card purchases in your check register.
  • Balance your checkbook at least once a month against the account statement that your bank sends you. You may discover additional fees charged (i.e. monthly maintenance fee, check order fee, etc.) or deposits posted (i.e. if you have an interest-bearing account) to your account that you were not previously taking into consideration when you wrote checks.
  • Ask your bank to clearly outline what regular fees you are responsible for with the checking account you have selected.
  • Make sure you are clear on how long it will take when you deposit a check for it to be posted to your account so that you don’t accidentally overdraw your account because you thought the check had already posted. Most banks post any deposits that you make after 2:00 p.m. on the next business day so, for example, if you made a deposit at 3:30 p.m. on a Friday it might very well not be credited to your account until Monday morning at the earliest. Check too about your bank’s policy on large deposits – it may put a “hold” on the check for longer than 24 hours which will affect your balance and could cause you to accidentally overdraw your account.

 

Understanding How A Debt Card Works

Just the name “debit card” can seem confusing. Is it something you can use like a credit card? Is it something you use to take cash out of an account like an ATM card? Using debit cards wisely involves knowing what they are, how they work and then thinking carefully about how to use them as part of your overall financial plan.

What is a Debit Card?
In the 1980s banks began to issue ATM (automated teller machine) cards to customers. These cards enabled customers to withdraw money directly from their account at ATM machines. Over time banks wanted to offer customers more features with the same ATM card, like the ability to make purchases directly linked to a specified account. Thus the creation of the debit card. The best way to think about debit cards is to consider them as a combination ATM card and checkbook.

Debit cards are linked to a specific account – typically they are linked to your checking account, but you should talk with your bank to verify which account the card will be linked to. When you make a purchase with a debit card it automatically deducts that amount from the account linked to the card, in the same way that when a check is cashed the amount is immediately deducted from your account. So, for example, if you purchase $89 worth of groceries from the supermarket and put it on your debt card it will show up as an $89 POS (point of sale) transaction or withdrawal from your account. Debit cards are unlike credit cards because they have a fixed limit (your bank account balance) and, because you’re using your own money and not borrowing from a credit company, you don’t have to pay interest when using a debit card the way you do if you charge something on a credit card and carry a balance. You can also withdraw money directly out of your own account when you use a debit card and the funds are automatically deducted from that balance.

When Should You Use a Debit Card?
Debit cards can help you maintain financial discipline. Instead of using, and potentially racking up significant, ongoing credit card debt, consider using a debit card. The fact that the purchase will be automatically deducted from your account may force you to think twice about a purchase…or at least determine that you have enough money in your account to pay for what you want to buy so that your card is not declined.

If you have an uneven credit card record (meaning you have maintained high balances, not paid on time or defaulted on the account), you may want to consider strictly using your debit card rather than your credit card for a certain period of time. Proving that you have used a debit card responsibly and maintained an account balance can help in re-establishing or shoring up your credit rating. While debit card transactions are not reported to credit bureaus (like credit card activity is), you can use the monthly bank account statement for the account that is linked to your debit card to prove to creditors you have improved your ability to manage your spending and payment habits.

Often parents of college-age children choose to give their children debit cards for purchases instead of a credit card. Debit cards can be a useful tool to help students learn how purchases and payments add up and how to pace their spending to keep within the balance of the funds in their account.

Making Purchases with a Debit Card
Most stores, gas stations, restaurants and other locations accept debit cards for payment. Ask the cashier or clerk if the store accepts debit card. If so, making a purchase or a payment (i.e. for car repair, meal at a restaurant, etc.) with a debit card is fairly simple:

  1. The clerk or cashier will swipe your card in the same way he or she would swipe a credit card for payment. If the cashier doesn’t ask, make sure to tell him or her that you are using a debit card.
  2. The cashier will then enter the amount of your purchase, which you should see on a PIN (personal identification number) pad or station. The PIN machine will ask you to enter your 4-digit identification number and to verify the amount that is being debited from your account for the purchase. Some retailers will give you the option of withdrawing additional money above the cost of the purchase – to have extra cash on hand–say $10 or $20. If you choose that option then you will be asked to verify the final total transaction amount (including the cash back that you requested) and then the request will be sent to your bank.
  3. The cashier will then get an approval code from your bank, which tells him or her that the transaction was approved, meaning that you have enough money in your account to pay for the purchase.
  4. Once your purchase is approved the bank “holds” that amount of money in your account to process and send funds to the retailer where you made your purchase. It’s important for you to know that the funds are held from your account, because if the transaction is incorrect and the cashier goes to “void” it out, those funds will still be held in your account until the transaction is verified with the store. So if there is an error with the transaction ask the cashier to do a “sale return” instead of voiding it out. That way the exact amount of the transaction will be credited back to your account and those funds will not be held by your bank. Then the cashier can process it as a new transaction with the final, correct amount to be deducted from your account.
  5. Your monthly bank statement will list each debit card transaction directly on your account statement in the same way that checks are listed (for checking accounts) or withdrawals.

Questions to Ask Before Obtaining a Debit Card:

  • Is there an annual fee for using the card?
  • What account is this card linked to? You want to know which account the card will deduct money from when making purchases or payments – i.e. your savings account, checking account, money market account, etc.
  • Is there a fee for using my debit card to withdraw money with the card from another bank’s ATM?
  • What happens if I lose the card? Who should I notify? Because your debit card is directly linked to your chosen account, a thief can possibly tamper with your savings or checking balance directly using your card. Under the Electronic Fund Transactions Act, you are only liable for $50 (i.e your account will still show a $50 loss) if you report your card missing within 2 days. Between 2 and 60 days you may be responsible for up to $500 of the funds used from your account (meaning your account will show up to a $500 loss) and if you wait longer than 60 days none of the amount stolen from your account will be refunded by the bank. Know exactly how your bank wants you to report a loss to resolve the issue quickly and to limit your liability.
  • What happens if there is a discrepancy on my bank statement related to a debit card purchase or payment?

Using a debit card can be a great way to track and maintain control over your spending without racking up credit card debt at high interest rates. Take the time to ask a few questions at your bank to understand how their debit card services work and consider using the debit card as a financial tool to manage your finances wisely.

 

Helpful Reminders For Keeping Your Budget In Check

A great tip to trimming your budget, eliminating debt, and focusing on saving and investing really does require you to be proactive in your financial life from the start. You can’t wait until you need to act because, many times, that will be too late.

1. Turn YOURSELF into a Monthly Expense Anyone who is financially secure will tell you to pay yourself first. Turn YOU into a monthly expense. Work to structure your life so that you are not enslaved to credit card debts and car loans. In eliminating these debts, you will free up extra money to be able to put towards your future. The younger you are, the more aggressive you should try to be in putting money away for retirement. I currently aim to put around 20% of my take home pay into various savings and retirement accounts.

2. Revisit Your Auto Insurance Look at your auto insurance policy and figure out if there is anything you can do to get a discount or cut the premium. Do a Google search to figure out where the savings can come from. You’d be surprised at what you find.

3. Health Insurance: You Can’t Afford to Wait I am not usually a fan of spending money now to save money later. By this I mean, I don’t buy the $500 curtains for my living room because it’s going to save me $50 a year on my home heating and cooling costs. However, I do make an exception with any type of insurance–especially with health insurance. Medical costs are soaring in this country. If you are caught uninsured, you may run the risk of making a payment for the rest of your life. You also run the risk of being uninsurable. With health insurance, it is quite simple: you simply can’t afford to wait.

4. Always Check Your Bills You should check your bills carefully every single month. Claims of identity theft are on the rise. You should meet this rise with a heightened level of vigilance on your end. Additionally, every three to six months, you should do an analysis to see if your cell phone plan is really working for you. Through this process you may discover that you had additionally features–like caller ID or call waiting–that you could live without. And, if you are in good standing, you can always call your credit card company to lower your APR.

This process of financial responsibility is not a one-time thing. You need to stay on top of it, actively and aggressively, for the rest of time..

Balancing Your Account

In this world of instantly checking your bank balance by internet or cell phone, the idea of balancing one’s account seems quaint, a relic from the past. Yet there are some compelling reasons to do this on a monthly basis, when your bank statement comes out.

First of all, balancing one’s bank account is easy to do. Use a computer program. There are commercial ones you can buy and there is even an open source program that will help you manage your money and you don’t have to pay for it. If you like it, give them a donation. In one of these programs, you record all your transactions. When your bank statement comes, you tell the program you want to balance the account and it allows you to check off all the transactions-income and out-go. While balancing by hand took fifteen minutes, using a computer program takes seconds if you are careful about recording things accurately. So difficulty is not an excuse any more.

Secondly, the people who run banks are only human. If you balance your books regularly, then you know when a mistake has been made. For example, if you still write checks, the bank may misread what you have written and charge a different amount from what you wrote down. Or, you might make a mistake on your addition for a deposit and the bank may record a different amount of money from what you thought you had.

Also, people write checks to you for any reason and the check bounces, by balancing your books you will know exactly what that has cost you. And, sometimes the bank may charge you a fee by mistake. If you balance your books every month, you’ll be able to see the problem and correct it before it costs you a lot of money. Finally, by balancing your books, you will be better able to identify fraud.

It’s not hard to balance your bank accounts and the information you get will give you peace of mind.