 | Mark Kolarik is the President of the Kansas Teachers Community Credit Union, located in Pittsburg, KS, since 10-2002 and is a board member of the Kansas Corporate Credit Union located in Wichita, KS . He has been employed in the financial service industry for the last 31 years, having worked in several credit unions for 21years and 10 years in the banking industry. He holds a Bachelor of Business Administration degree from the University of Wisconsin-LaCrosse and is a Certificated Credit Union Executive. |
Banking & Finance
2011-10-20 11:33:29
Bounced checks
Q: I am having trouble balancing my checking account, what can I do to keep from bouncing checks?
A: Americans bounce more than 125 million bad checks each year. And that figure will go up as technologies decrease your float time (the time it takes your checks to clear). With so many online transactions, recurring automated bill payments, growing use of debit cards and so many trips to the ATM, keeping track to the balance in your checkbook can become a guessing game. One that becomes expensive if you’re not careful.
A bounced check every now and then could be a fluke. But if it’s more than an occasional event, examine your habits. Start by keeping a balanced checkbook; be diligent in recording debit card and ATM transactions, and other fees and keeping better routines and records overall. Use an online banking tool to review your checking account daily. But if there’s still a bit of bouncing going on, consider using these three tools:
1. Transfer from other accounts
This kind of protection kicks in when you’ve prearranged to have funds from one account transfer to your checking account when you don’t have enough in your checking account to cover a transaction. Some financial institutions charge a fee for each transfer. You may have to request this service and choose which account the transferred money will come from. The best thing about this service is it helps avoid NSF (non sufficient funds) fees. For instance, if you write a bad check, you could end up paying your financial institution a NSF fee and the merchant could also charge you a fee for the bad check.
2. Line of credit
A line of credit generally covers amount higher than those associated with the occasional bounced check. You apply for a line of credit just as you would apply for a signature loan. The line of credit could then be accessed to cover checks that overdraft your checking account. While this service generally means avoiding bounced check fees, keep in mind that the interest rate on a line of credit can run as high as credit card rates or higher.
3. Courtesy pay
Should you inadvertently overdraw your checking account; programs such as courtesy pay can help. If sufficient funds are not available in your checking account to cover a check, your financial institution will cover the check up to a certain maximum dollar amount. The amount covered by courtesy pay must then be paid back to the financial institution within 30 days. The fee to cover the check will be about the same as a NSF fee. However, courtesy pay can save you the embarrassment and inconvenience of a returned check as well as the fee merchants normally charge for checks returned to them.
These tools can help you stay on track, but the best way is to manage your finances and prevent being overdrawn, be aware what you’re spending-every day. If you frequently use your debit card and ATM card, focus on recording every transaction in a timely manner. And eliminate missed deposits by setting up an old service standby – direct deposit.
