Friday, August 15, 2008

Saving Bank Charges and Fees

I learned something the hard way a long way back and paid the price of bank fees and embarrassment. Recently, it happened to a friend who is old enough to know better, so I thought I should share it, since some of you are old enough to know better, too.

It is just a little feature called linking. You link your checking account with another funds source, and the bank automatically takes the money from that source, rather than bouncing a check or adding fees to your account when you use your cash card or checking account and get into an overdraft situation.

It is easy to write a bad check without intending to. I wrote one to the sheriff of Carnesville, GA when I happened to be the driver of a speeding car that was returning three college students from a Christmas break road trip. The check was good, at the time, but when I got back to Emory and wrote a check for my books the next week, I made a subtraction error. The check for the books hit the bank before the check to the sheriff, so that one bounced. The Georgia State Patrol was notified to pick me up. It seems the sheriff had been killed in a car wreck with my check in his pocket, so this was a sensitive matter to the law enforcement officials. Fortunately for me, my Mama was home when the State Patrol arrived, and she wrote them one of her good-as-gold checks, and they didn't wait to take me to jail.

I did get a talking-to by both Mama and Larry, about applied mathmatics. :)

The result was I added $200 to my checking account, but didn't put it in my check register. So I had that buffer for the errors I might make. And when I balanced my checkbook, I would always balance to $200, instead of zero. It worked and saved me from many bad checks, but not from all, since checks have gotten bigger over time.

If you do get into a bounce situation, rush to the bank and ask to speak to an officer. He or she can remove those charges if you convince them it was a mistake and you will never let it happen, again. Or, you can bargain with them. If several checks bounced, for example, it may be that most of them wouldn't have bounced if the bank had processed them before the big one. Since they processed the big one, first, there were not enough funds for four little checks. Why should you be charged five times $39 when their processing order could have been reversed and they would have only bounced the big one? (Because they make more money!)

But, you can avoid the whole scenario by account linking.

If you open a savings account at the bank (and I don't generally do this because they pay such low interest), they can link to that account. If an overdraft situation occurs, they automatically take the money from savings.

If you are buying your home, you can get the bank to give you a home equity line of credit. It is like a loan, but you don't take the money or pay interest, until you actually use it. It can be used for short-term cash needs, like replacing an air conditioner or buying tires, or some other unexpected expense. When you overdraft your checking account, the bank automatically increases the loan amount, and the check doesn't bounce.

If you get a credit card from the bank, they can link the checking account to the credit card, and use it to keep from bouncing a check. Just make sure of two things: 1. pay the entire balance due, plus about 5%, when you get a bill, because a cash transaction on a credit card gives them the highest interest and starts compounding the day the cash is taken and keeps compounding until it is paid off. 2. Be careful that the check to pay the credit card will not create an overdraft. That can get you into late fees, higher interest rates and perhaps, charges of kiting.

Ask about fees related to account linking. Bancorp South does not charge for this service. Our credit union charges $1 per instance. Shop around, if necessary, because it is worth changing banks to get this protection.

A stitch in time saves nine.

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