Archive for the ‘Financial’ category

Banking Tips

September 9, 2009

I thought I’d write about banks today. Not in a controversial way, but rather, just to give some tips about basic banking for people that may not be too familiar with banking procedures. I know that when I started working for banks, I learned a heck of a lot about the ways that banks work and how those procedures can be tricky to the common account holder. There were many things I learned that tricked me in the past and got me in a little bit of trouble with fees and such. So here are a few facts and tips on how to avoid sending your account into the negative and getting slammed with insufficient funds fees (NSF’s).

First off, I’d like to talk about keeping a balanced register. Keeping a register of your bank account could be the single most important thing to do in order to make sure you don’t go negative. ALWAYS write down what you spend. ALWAYS write down your deposits and how much you withdraw TO THE PENNY! I know it’s hard to carry around a checkbook and register all the time, because they’re big and bulky, but at least keep one at home and don’t throw away your receipts until you write them down.

There are several things that can help an account holder with balancing a checkbook. First, if your bank offers it, sign up for the savings account that rounds up your purchase made with your debit card to the next dollar and puts the change in your savings. The two advantages to these accounts would be that it keeps every purchase you make at an even dollar amount, and it helps you save money with every purchase that adds pretty quick (more quickly than you may think). Just so I’m not confusing anyone, the way it works is when you make a purchase, say, for $24.50, the bank would round that purchase UP to $25 and take the $0.50 and put it into your savings account. So, if you make 4 purchases in one day of $23.25, $15.15, $6.10 and $5.75, $2.75 would be put into your savings account. You’re not losing the money, it’s just being transferred automatically to your savings account. It’s quite the handy little tool to have.

Secondly, when balancing your checkbook, VERY SELDOM trust the balance you receive from the ATM. ATM balances are deceiving. There are so many factors that you need to take into account when getting your balances from the bank, that it’s just better not to do so. When you get your balance from the bank, there are a lot of factors that come into play. First, have all of your transactions “hard-posted” yet? The term “hard-posted” means that the computers on both sides of the operation have finished communicating with each other and no more charges can be added to that particular transaction. When the computers are still in the process of communicating, and the initial charge has been deducted, but not finalized, that process is called “soft-posting.” This is when companies like gas stations, utility companies, or restaurants may put down a “pre-authorization” charge which could be different from the final and actual charge. This is just a process that ensures that they do get their money and it usually finishes clearing in a 24-hour period. Also, if you do have the rounding savings account, it usually takes about the same amount of time for the change to be switched between accounts. So, if you go to the bank to get a balance, go inside and ask the tellers if everything is done clearing from your account, and if not, make sure all the things clearing are what you remember purchasing. Don’t be afraid to ask the tellers questions either. They’re supposed to be nice and helpful, because that’s what they’re being paid to do. It’s possible you’ll catch them on a bad day or something, but we all have those at work sometimes.

There are several different things that you need to be aware of if you are a customer and you use your debit card a lot. First, when you use your debit card at a gas station, it is very important that you run it as a credit card transaction. I know it’s technically a debit card, but this does work! Gas stations are trying to ensure that they get their money from their customers, which is completely understandable. There have been instances in the past where people have used debit cards to purchase amounts of gas that came out to more than what was actually in the checking account of that customer, so the transaction was declined and the gas stations got ripped off. So now, gas stations are putting a pre-authorization of anywhere from $50 to $100 dollars on debit cards. If the account doesn’t have that much money in it, then the transaction could be declined. Now, these pre-authorization amounts do fall off in that 24-hour period I mentioned earlier, but they’re still there for that period, which can be a major inconvenience for account holders. However, if you run your debit card as a credit card, you will only receive a pre-authorization amount of $1. I don’t know why gas companies only put $1 on a credit card and $100 on a debit card, but that’s what they do. This is just a trick I use to avoid being denied other for other purchases I may have to make later in the day.

Secondly, when you eat at a restaurant and you leave a tip on your card, the charge for that tip may not show up for several days. The restaurant runs your initial charge for the meal before they run the tip charge and the waiter/waitress/bartender has to turn that receipt in to the manager in order to get the tip. When the manager receives these receipts, they have to re-run your card in order to collect the tip. They don’t re-run the whole purchase, just the tip amount that you put on the receipt. All this depends on how quickly the manager gets around to it and how many other similar transactions they have to do. And, once again, this is another transaction that may take a day or so to clear, once it is entered into the system.

Finally, there is one more thing you need to know about debit cards. If you use your debit card to make a purchase and it seems to go through immediately, but is rejected at a later time, the retailer legally has the ability to run that transaction again up to 6 months later. Likewise, if that transaction doesn’t go through for one reason or another, the retailer still has the ability to wait to charge your card for that same 6 month period. Now, when you make the purchase, it’s very unlikely that the bank is actually going to deny it if it is just a small purchase. Odds are, they are going to put the transaction through and slap you with a nice NSF (NSF’s are a major source of income for any bank). And, since the computers are going to be communicating for that 24-hour period, the bank could have that amount of time to deny said purchase (this mostly happens on larger amounts, as a way to help the bank avoid going too much in the hole on your account).

Another thing to keep your eye on would be fees. Fees of any kind can do some damage to your bank account. I know they seem like the common sense thing to do, and since banks are required to notify you of them up front, most people think they have a handle on them. However, to many a person, they can be quite confusing. Take NSF’s for example. An NSF is typically charged to your account when you either go over your balance (that is going into the negative) or when you have money in your account, but not enough to cover the cost of a purchase or charge being applied to your account. For instance, if you have $15 in your account and a charge of $16 is trying to come through, it is up to the bank whether or not to clear the charge (make it go through), but you WILL be charged an NSF. Once that first NSF is applied (the range is anywhere from $25 to $35), anytime you keep going over your balance, more NSF’s will be applied. That is, if you take your account into the negative territory, every time you make another purchase, another NSF will be added. That’s what catches a lot of people. The NSF is not a single time charge. It is often times a multiple charge.

A lot of people that get into trouble with NSF’s have “Overdraft Protection” on their account. Be aware folks, this is NOT a free service. The overdraft protection is a service that is used to make sure that bills/purchases will be paid if they are more than your balance. It should only be used when it is absolutely necessary and you should keep in mind that Overdraft Protection is NOT EXTRA MONEY IN YOUR ACCOUNT!!! Every time that you use your Overdraft Protection to make a payment, purchase or withdrawal, you WILL be charged an NSF. This is a quick way to run your account into the negative. The Overdraft Protection pays the amount into the negative and THEN stacks the fees on top of that. Careful, I’ve seen a lot of bad done with this. If you’re good at keeping track of your expenses, then I would strongly suggest you request that Overdraft be taken off of your account.

These are just a few tips that can help keep your balance in the positive and to keep the bank from “screwing” you, as I’ve heard so many times before. And even though you may not understand all of the fees or processes the banks use to keep track of accounts, it’s technically all in the paperwork that you receive when you open your account. So be careful, because 99% of all errors are technically the cause of the customer, not the bank. Unless you have an extremely good case or know someone that works in the bank, you’re probably not going to get these fees refunded to you. So, good luck with your banking. It’s not as complicated as it seems, if you just keep that checkbook balanced!