by Dana Fowle
Aired July 25, 2016
Many of us have moved much of our banking to the digital world. But, the Fox 5 I-Team's Dana Fowle says in some cases, old-fashioned pen and paper might work best.
And by pen and paper I mean - your bank ledger. And a pen. Believe me I had to dig this out of a drawer. I don't use it. But here's where it can be helpful.
Many of us today, deposit checks into checking through a mobile app. We transfer funds with a quick click. I love it. It's so convenient. Here's the problem, if you don't have a lot of wiggle room in your account, you can overdraw pretty easily. You can forget from time to time what you've spent and what you've deposited while you're waiting for it to show up in your digital account registry.
Then you get dinged $35 for each overdraft. But it's more complicated than that if you look at the
complaints that roll in to the Consumer Financial Protection Bureau.
Look at this one - the writer complains he was charged $320 in overdraft fees even though his account showed he had the money. The bank's response? Some of that money was still pending despite his digital ledger showing it was in there.
But this makes it even more complicated. Let's say you're pretty good at remembering how you spend your money. A study by the Pew Charitable Trusts says that many banks don't actually process your deposits in the order they came in but rather largest to smallest. They switch them up. And that's how they trip you up.
Let's say you have $500 in your checking account and you write four checks for $100 a piece. Then you write another for $1000. If the bank processes the big one first - then the smaller ones will all bounce. At about $35 a piece that's $175 in overdraft fees. Now if those four $100 checks process first, providing they were there first, they will clear and you'll only bounce the one big check. Your overdraft fee would be $35. And that's a big difference.
So, if you are a person who keeps a checking account that has little room for mistakes, then it might be a good idea to just keep this - a banking ledger - in your purse, on your desk, in your glove compartment, someplace. It can save you a lot of money.
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