Regardless of how you feel about the economy, credit card industry or finances in general, we all have one thing in common- we all need money to survive. There is no escaping the fact that you will either need cold hard cash, checks or credit cards to make necessary purchases each day.
Many of these purchases involve transactions that go through your checking account. Unlike in days gone by, writing a check is no longer the only method of making a payment from your bank account. In fact with so many options 
available today from debit cards to electronic payments it is very easy to lose track of transactions that can result in overdrawing your account. Banks charge customers who do not have enough funds to cover transactions overdraft or insufficient fund fees. These fees can quickly add up to hundreds of dollars making it imperative you stay on top of your finances and manage your account with precision.
The Difference Between Overdraft and Insufficient Fund Fees.
The main difference between the two fees is actually the action your bank takes in response to a transaction that hits your account that is not covered. If your bank offers some form of overdraft protection in most cases they will honor the transaction and charge you a service fee for covering the check or debit to your account. Without overdraft protection, your bank will deny the transaction and return the check or debit to the vendor noting the reason being “insufficient funds”. In 9 out of 10 cases, you will not only face an insufficient fee charge from your bank but also a fee from the vendor for having the transaction denied.
Tips To Avoid These Costly Fees.
It seems that there are fees attached to just about anything these days, some of which are unavoidable. That is not the case with overdraft or insufficient fund fees. Avoiding these fees are completely within your control. Here is how you can make sure you are not losing money paying unnecessary fees.
- Organization is key to avoid situations that could lead to overdrafts on your checking account. You will have to be diligent in keeping track of all transactions such as checks, ATM withdrawals, electronic debits, automated payments and debit card purchases. Missing just one receipt or check payment can have expensive consequences if it causes your account to become overdrawn.
- Most banks offer online services. After creating an account you can log on as frequently as you like to check your account balance. This makes is possible to spot errors before they result in an overdraft or deal with overdrafts quickly to correct your account. If your bank doesn’t offer this, consider opening a new account and get a free checking account bonus for doing so.
- Consider overdraft services that offer real protection, such as linking your checking account to a savings account. In the event your account becomes overdrawn, the bank can draw from the linked account.
- There are many free online management tools that help consumers track the best savings accounts. Consider signing up for one of these accounts which will give you one more tool to keep track of transactions posting to your checking account.
Now that you know what these fees are and how to avoid them, you are in a better position to prevent paying that extra expense.
If you’re fed up with paying late fees on your credit cards and overdrafts to your bank, these tips should help. When you live from one paycheck to the next, or maybe even worse, you don’t know when you’re next paycheck is going to come – it’s difficult to juggle the bills and due dates. Taking strides to improve your financial situation can save you both in terms of late fees and overdrafts – but also in the long run. Credit card companies routinely increase interest rates on cardholders who pay their cards after the due date, since you’re seen as a bigger financial risk to them.
The following tips will help you minimize late fees and overdrafts:
When Is it Due, Exactly?
When money is tight, many people find themselves sending all of their payments in on the day they are due. You would think as long as it is postmarked by the due date, or paid online on the due date, it should be considered “on time” right? Check the fine print on the back of a credit card statement to see when the late fees are applied – technically a late fee can be applied if a payment is not received and posted to your account by a certain TIME on the due date – even if it’s postmarked on time.
Do what you can to change how you pay your bills – if they’re due on the 15th, pretend they’re due on the 10th. This will give you 5 days for your mailed checks to arrive and get posted; or 5 days for an online payment to be posted. (Did you know some online payments take 2 days to post to your account?! Why isn’t it instant? Who knows – but knowledge is the power here. Even when paying online, give yourself a few days before the due date to ensure there is enough time for the payment to post).
Change Your Due Dates
Instead of just pretending you have an earlier due date, you can actually change many of your account due dates. If you find almost all of your bills are due on the same day of the month, you can call and change due dates and stagger them out across the month if that makes it easier for you to pay. Instead of coming up with the full amount for all of your bills by the 10th of the month, you can pay a few each week, which makes managing your cash easier.
If you have a mortgage that you pay monthly, you may even consider asking the mortgage company for a bi-weekly mortgage plan. There is usually a fee to set it up which increases the amount you owe over the year, but you pay less interest over the life of the mortgage. Plus, if paying half of your mortgage payment every other week is easier than paying it all at the end of the month, the money you save in late fees or overdrafts is probably more substantial than the fee charged by the mortgage company for setting up a bi-weekly payment.
Bank Regulations Help Reduce Overdrafts
Previously, banks were known to change the order of withdrawals so that the most expensive withdrawal would post the account before any of the other, smaller withdrawals that clear in the same time frame. This meant if you were a few dollars short, instead of having one overdraft for the last withdrawal to clear the bank – you would have multiple overdraft fees for each individual withdrawal if the largest withdrawal was processed before the smaller ones.
Luckily, changes in banking regulations are putting a stop to this practice. You can even opt-out of overdrafts by signing a form with your bank that prevents them from paying any withdrawal that you don’t have enough money to cover.
Guiding money-making teens down the path to financial stability is much easier if they have had some experience with handling money in their early teen years, but even if they have had absolutely no responsibilities up to this point all is not lost.
If your teen has not previously been in control of their wallet, they may view bringing in a little money as a rush of freedom and although they will never admit it, they will need council on how to ensure that it lasts… at least until the next pay day.
It is important though to be sensitive in your approach. Your teen may see any advice as interference and try to drown out your words of wisdom. The following tips can help you to get the message across without facing too much resistance:
Lead by Example
Encourage your teenager to sit with you while you go through the motions of preparing the family monthly budget. Try not to turn it into a tutorial, but remain conversational and keep the mood light. You can probably comment on how the cost of living has climbed since they were a baby and pull them in to have a look at the expense categories. It’s also best to show them how to tie a budget into real life goals, so they can see that saving is not arbitrary but rather a focused attempt to achieve dreams. Before you know it they will be eating out of your hand and actually asking questions about how things are done.
Help them Open a Checking Account
Assuming your teenager already has a savings account at the bank from an earlier age offer to take them in to open a checking account. Make the graduation from savings account to checking account seem like a kind of coming of age experience, and take the opportunity to give them some pointers on how to reconcile their spending at the end of the month. Offer to help them with it for the first couple of months. Tell them they can think of this time period as riding a bike with training wheels, it may be possible to learn without them, but they sure make the process less dangerous.
Highlight the Importance of Charity
When your child starts to earn an income it is a great opportunity to talk to them about the importance of giving back. It doesn’t necessarily have to come from a religious perspective, although it certainly can, but let them know that putting some good out into the world ensures that they are setting the wheels of positive reciprocity in motion. This doesn’t even have to be phrased as a question, but rather bring it up as if it were the natural and expected thing to do by asking “So have you decided what charity you will be supporting?” as opposed to “Now that you are working you need to give something charity.” Engaging them like this catches them off guard and is more likely to spark a constructive conversation, than if the topic were to be broached like a lecture series.
Instill the Lesson of Delayed Gratification
While this is best taught at a younger age it is never too late to try. If your teenager is on the verge of blowing their entire week’s earnings on a frivolous item, instead of flying off the handle, think of something that you know they would like to have. Maybe it’s a car or a new music system. Whatever the item, use this to drive home the concept of spending it all now to get a small thrill as opposed to saving something up each month to get something really satisfying. This takes time to digest and they may falter but stick to the message and remind them of it the following month when they are still unable to afford the thing they crave because of poor spending habits.
Talk to them about Credit Cards
Credit card companies love to target teenagers precisely because they are a vulnerable group, but also because they are also at the age when they are likely to be bailed out by parents or guardians. Make sure they are aware of the charges and use an online calculator to highlight what the interest payment will be on an item if left unpaid for a month or even six months. Educating your teen about the proper use of plastic can save you a bundle both financially and emotionally.
Consider Matching their Contributions
Finally, encourage your teen to save. This is probably the best thing you can do for them as a parent to shape their financial future. Make sure they know that the earlier they start to save, the better off they will be. Take advantage of online calculators to bring home the difference in accumulated savings from someone who starts stashing at 16 as opposed to starting at 21. Then make those numbers real by tying them to material items like a house or a car.
The key to influencing teenagers is keeping the lines of communication open. Ask them questions and constantly monitor their performance from a safe distance. The teen years are extremely important and getting things right now can give them a firm footing for the trials of their early twenties when even more responsibilities crop up.
Remember when debit cards were so ‘un-cool?’ The change in the economy has forced many people to stop using their credit cards and so the debit card has become the payment method of choice.
There are times when it is better to use a debit card over cash or a check (although it is like paying with these). Here are some situations to keep in mind.
When You Need Instant Verification
The bad thing about using checks is that even though you might get a receipt, and the payment gets credited to your account or sale there is the longer clearing time that it takes behind the scenes. Where this might trip you up, is that if you do not have enough money to cover the payment, the check could bounce and you will have enormous fees that eat into your account. Your debit card transaction immediately checks to make sure you have the money to cover the transactions and some merchants even put a temporary hold on funds in insure that the money is there.
When You Need to Make an Internet Purchase
It is better to use a debit card for Internet Purchases than a bank draft transaction. By doing so, you are giving a merchant full access to your checking account when you supply the bank routing number and account number. If you are a victim of fraud it is better if it is with a debit card than your bank account because a debit card can be cancelled and a new one issued in its place. If your bank account has been hacked into, then you have no other choice but to close that account and open a new one and the headaches of doing that far outweigh using a debit card.
A valuable piece of advice for Internet purchases is to open an entirely separate checking account just for such transactions and use a debit card that is only on that account. Then, move only enough money into the account that you need to make your purchases. It works by insulating your other accounts from Internet transactions.
When Merchants No Longer Accept Checks
Many merchants are stopping the practice of accepting checks for payments. Debit cards, credit cards and cash are becoming the sole methods of accepting payments. And, since you might not be using your credit cards until you get them paid off and cash is not convenient, then a debit card makes the most sense to use for such transactions.
How long will it be until there are no more checks written for purchases? The trend 
is towards moving away from paper checks and replacing them with the use of a debit card instead.
Here are the only things that you will want to use checks for in the near future:
Utilities
If you are like most families these days, you pay your utilities as close to the due date as possible every month. That is so that you can keep more of your money longer. But, this places you at risk because if you are late, and the utility company disconnects you, then you are in trouble. Writing a check gives you proof that you paid the utilities, even though you still should get a receipt.
Legal Related
If you are involved in a matter that is of a legal nature (has legal ramifications if you do not make a payment, etc.) then you should pay with a check. This includes things like alimony or child support (if those are not already paid directly from your payroll check) and any state or federal tax payments. Nothing beats a cancelled check in your hand when Uncle Sam comes and asks about a payment.
Down Payment on House or Car
If you are buying a house or a car, you should make the down payment with a check. In most cases, a personal check is not acceptable for a down payment on a house, but is acceptable on a vehicle purchase (along with proper id). Although, you might have to wait until the check clears before you can drive away in your new car.
Rent
This is another situation where you do not want to get caught in having to try to prove that you made a payment. Always pay with a check and always ask for a receipt, then keep those receipts on file for several years.
Loan Payments to Family or Friends
If you borrow money from family or friends you should pay them back with checks, not cash. Being able to prove you made payments will help in case there is ever a discrepancy or disagreement about what you have paid to date.
These are some of the more important ones but there might be other minor transactions that are best paid with checks. Since checks are still useful for some situations, we might see banks that have debit card-only features along with traditional checking accounts. It could happen sooner than you think.
Quick on the withdrawal, slow on the deposit. That is how many banks operate when it comes to taking money from and
adding it to your accounts. Here’s the reason why:
A federal law known as ‘check 21’ took effect five years ago. This law allows banks to convert paper checks into digital images and then settle them by electronic means instead of having to sort through piles of checks every day. While this is good for them, it is bad for you because it means that when you write a check, it is processed much faster and the money leaves your account sooner.
The old method of using what is known as ‘float’ is almost gone. That is the time between when you write the check and when the money comes out of your account.
On the other hand, when you make a deposit into your account, you have to wait the same amount of time that you used to have to wait 20 years ago. It is more than ironic that this policy has not changed. It seems that the advantages are all in favor of the financial institutions with which we do business.
Here is what you need to do to protect yourself:
Know Bank Policies
Rules on funds availabilities are set primarily by the Federal Reserve but, there might be some local bank policies that you need to know as well. The best thing to do is to go to your bank and ask for a policy statement that spells out when funds are available on deposits.
Ask about fees for overdraft charges while you are there. You should have a full understanding after reading the policy how much these fees are and when you might be subjected to them.
It is unfortunate that we are made to dance around policies just to make sure that we can keep our hard-earned money, but that is the kind of world we live in today.
Use Float Sparingly
Do not try to test the system and see how far you can push the funds available policy or writing checks in order to keep the money in your account longer. This is a plan for disaster and the fees that you will incur will eat up the balances in your accounts quickly.
Manage your money and accounts in a way that you keep yourself out of trouble with these policies. You will be better off and keep more of your money in the process.
Big banks have found themselves under the microscope for a variety of issues over the past few months. Now that
more people are paying attention to what is actually going on within the lending industry, many consumers are livid that banks in the U.S. are on track to collect close to $39 billion in overdraft fees this year alone. Obviously no one expects banks to operate for free or at a loss, however this figure seems a bit excessive as millions of people still struggle to get back on track financially. Here are a few tips to help you keep your hard earned cash in your checking account versus contributing it to the billions already collected in overdraft fees.
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Review your account information to understand overdraft policies- Each bank has their own policy regarding overdrawn accounts. Does your bank decline a debit card transaction that exceeds available funds? Do they return checks or other transactions if there is not enough money in your account or will they process and honor these transactions for a fee? Can you link a savings account to your checking account to serve as back-up? These are all questions you should be able to answer to avoid paying unnecessary fees. If you do not know what actions will result in fees you have no way to avoid those actions.
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Create a cushion or buffer- It is not uncommon for people living paycheck-to-paycheck to have a revolving bank account balance. In other words, money goes in on payday, bills are paid and there is little if anything left over until the next pay day. Unfortunately the very people who cannot afford to pay overdraft fees are the people more likely to incur them. This can be prevented by creating a cushion of cash that remains in your account to cover mistakes or errors. Do this simply by deducting your “cushion” amount from your account balance without actually removing the money from your account. If you cannot do this in one lump sum, consider deducting a few dollars each week to fit your budget. Another way to build a cushion is by rounding up every transaction. If you use your debit card for $19.21, record it as $20. If you do this every time you will be surprised how quickly it adds up without even realizing you are saving money.
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Record and track every transaction- The single most important thing you can do to avoid the fees and penalties that result from an overdrawn checking account is to not spend more money than you have in your account. To do this you must know how much money you have in your account and what transactions are outstanding at all times. Years ago, you would do this by simply logging deposits and checks written against your account. Today most consumers have to track checks, debit card transactions, direct deposit, transfers and electronic payments (reoccurring or automatic). Failing to record even one transaction can have disastrous results and start a domino effect of overdraft fees and/or transactions returned for insufficient funds. Regularly balance your check registrar and pay close attention to transactions posted to your account. Most banks offer online access to your account balances making it easy and convenient to quickly track transactions and spot errors immediately.
Just as many people are angered by the actions of banks in recent months there are other consumers who feel that banks-like other businesses have every right to make money. Regardless of where you stand on this issue, the fact remains that each person is ultimately responsible for managing his or her money. Avoid fees and penalties by managing your accounts according to the terms of your agreement and building a cushion of added protection. Exercise your right to change banks if you feel you have been treated unfairly. Invest the time and energy required to maintain accurate and up to date records and contact your bank immediately when you notice errors on your account. By doing these things you will reduce the chances of overdrawing your account and save hundreds of dollars in fees or penalties.
Have you ever gotten tired of the endless and features that some personal finance software programs throw at you? Do you loathe paying for features that you never use and wouldn’t even bother to use if you knew how? If your answer to these questions is ‘yes’, then you might be a good candidate for one of the newest entries into the personal finance management area.
Green Sherpa is an Internet-based personal finance application which is known as Software as a Service (SaaS for short). What this means is that there is no software to load onto your PC. You simply visit their website, set up an account and start using the program. There are lots of SaaS programs that are in use, so this is nothing new. For example, most photo websites are SaaS programs. And, facebook.com could be considered one of the largest SaaS applications on the Internet in terms of use.
The best thing about Green Sherpa is that it features a 3-step process which forms the basis of a powerful financial planning process.
Track Historical Expenses
This first step is a key because tracking your past financial expenses helps map out where your money is going and the income that covers it. Then, it goes further in projecting those expenses for 12 months. In this manner, you get a complete look at your cash flow.
Plan for the Future
After the first step has been established, you are then assisted in setting up and maintaining a financial plan. You will find a Goalkeeper that helps you set automated goals which are tracked each month. For example, if you want to purchase a house and pay down debt, Green Sherpa helps you accomplish both by setting goals based on those two desires.
Discuss Your Plan
The final step is in creating and using online financial conversations in your accounts. If you have questions about goals and plans, you can set up access for your domestic partner, or financial advisers who can enter a discussion that will help you make decisions about your money – all within the confines of your account.
Green Sherpa has garnered some solid recommendations from Wallet Pop, CNN Money, and Computer World. And that is pretty difficult to do when running against the likes of Quicken and other personal finance giants with only a few years in business.
While there are free websites that track expenses, none go the extra and provide for planning as does Green Sherpa. That is why the owners believe that users will be willing to pay the $8 per month fee. And, when you stop to consider what it can do to help you, it might just be the smartest $8 you’ve ever spent.
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