Things You'll Need:
- Checking Account
- Checking Account Check Card
- Checking Account ATM Card
-
Step 1
Begin by understanding how checking account check card transactions are posted and processed. When you make a checking account check card transaction (where you DO NOT enter a pin number), the amount of your purchase is immediately deducted from your account' s available cash balance at your bank. Federal banking rules require that those funds be placed back onto your checking balance after 24 hours, and remain there until the transaction is actually processed. Since the transaction is processed like a VISA or MasterCard transaction, the merchant has to process some paperwork (even electronically) and often there is a delay of up to five days. Once that transaction information is processed, then once again the amount of the purchase is taken from your checking account, this time permanently. Now that you understand the process used to apply a check card (remember, no PIN was entered with this transaction), you can now take the next step in understanding why this causes you overdrafts.
-
Step 2
Now that you understand how the transactions work, understand that the taking away of funds from your available balance, then adding the funds back into the balance, then removing those funds creates a trap. Anyone who does not keep a checking account balance register, but instead use the available balance listed online or at the ATM machine to gauge how much money they have, cannot mentally adjust for this money out-in-out scenario. A transaction is made with the check card and the balance goes down. Other transactions are made and the balance goes down. But then some of those transactions pop back into the balance while waiting to be fully processed. Meanwhile, you are watching your available balance to know how much you have to spend. Suddenly, you remove enough money so that when the funds are taken out permanently for a transaction and BANG! An overdraft. You were watching your balance but could not keep track of all the balance changes taking place, up and down and all around.
-
Step 3
There are several choices in how you avoid the activities leading to those checking account check card overdraft and fees. The first is to go to your bank, turn in your checking account check card and request that it be replaced with an ATM card. With an ATM card, you MUST enter a PIN (personal identification number) in order for the transaction to take place. Once that transaction takes place, that money is out of your balance and permanently! The second choice is to use only paper checks and keep a checking account balance register, provided with each new order of checks. The third is to continue using the checking account check card but maintain an accurate checking account balance register and use the balance on it to know how much money you have, not the balance you see online or at the ATM. All three of these options will reduce your chances of an overdraft by 99 percent.
