How Banks Make Money Off Your Bank Accounts

Posted by on Mar 12, 2013 in Articles | 0 comments

Reed-Armstead_467689Shopping has never been easier! From television infomercials to the Internet, there are limitless places to shop and pay with plastic without ever leaving your chair. However, this ease of spending money brings with it a huge headache: Unreliable balance reporting that may lead you to believe you have more money than you do. Banks have convinced us to rely on their electronic reporting of account balances and that the traditional checkbook register is pass√©. The problem is that your bank’s report of your balance is often wrong, falsely overstated, leading you to pay penalties and overdraft fees. The bank makes money off of your mistakes! Less of your money for you, more for the bank. I recently experienced that first-hand and checked my account balances six or seven times over two weeks and never once found it to be accurate. Here’s what happened: First, I wrote a check that did not clear for 19 days. During that time, the bank showed my balance as overstated by the amount of this check. This is nothing new; however, with so many people failing to accurately track their balances, relying on the bank for their account balance, they’re overdrawing their accounts regularly and losing their hard-earned money to overdraft fees and penalties. Next, I bought two items from a television ad, and it took two to three weeks for the money to be removed from my account. In the case of the latter purchase, I saw it posted to my account for a few days then removed. When I called to ask why, the retailer told me it “was their practice to charge the account to ensure funds were available, then to drop it until the item was ready to ship at which time they would once again charge my account.” If I had not been tracking my own money, I would have been led to believe there was more in my account than there was, potentially leading to another overdraft fee. Gas stations, and other vendors like utility companies and some credit card companies do not withdraw funds from accounts for several days. This often happens with my own mortgage company. Also, automatic withdrawals that are now so popular with many companies (and in some instances, the required form of payment) often fluctuate if the due date falls on a weekend or holiday. These are all instances that can lead to misjudging your balance unless you are diligently tracking them. Whenever you purchase over the phone or Internet, retailers typically delay charging your card to ensure that they can deliver the product to you within the four to eight week guidelines established by the Federal Trade Commission (FTC). They withhold charging your card until they either replenish their inventory, or in some cases, create inventory for the first time. In this latter case, retailers may simply be testing the market to determine if there is enough demand before actually developing the product. If the demand is there, they’ll proceed; if not, they never charge your card and advise you accordingly. Again, this happened to me when ordering a book from a television ad. I was told my card wouldn’t be charged until they were ready to ship, approximately 30 to 60 days hence. Back order or market testing? I tend to believe it was the latter. These are typical examples of “false positives.” False positives are all those situations in which you are led to believe that you have more money in your account than you really do. The only way to take control of your money and stop paying overdraft fees is to do your own tracking. With the number of accounts most people have (checking plus multiple credit cards), tracking has become more complex than can be handled with the traditional checkbook register. You can use spreadsheet programs, like Excel to track your accounts and balances. Plus there are apps like Mint and a new smart electronic checkbook register, the Debit Tracker, that can help you handle the more complex tracking. This acts like a bookkeeper tracking all of your balances and helping you create a budget at the end of a month of tracking. Take note, however: Not all apps work in real-time, nor do all apps alert you to account withdrawals due on any given day. Many only report that after the withdrawal has occurred. Nearly every financial guru will tell you to track your money and your spending. It is the most effective way to take control of your money, get out of debt and start building your savings. Tracking works because it keeps you aware of your balance and your goals. Moreover, it is a simple habit to create that has a multiplier effect on altering your behaviors. If you want to change any outcome, you must first track. By tracking, you can eliminate paying overdraft fees and penalties and will not be lulled into believing there is more money in your account than there really is. Tracking is the only way to overcome the problems created by false positives. “If money is tight and it’s gotta be right, track it or lack it.” To read more about the importance of tracking, go to The Debit Tracker is the first smart money tracker that delivers real financial control while enabling users to manage multiple financial accounts electronically and in real time. This innovative smart money tracker lets users track up to 50 different accounts with over 100 spending categories. Plus it provides Bill Alerts, so you know which bills are being paid every day via auto-withdrawal. Also, download Good Habits, Good Life! 5 Habits to Build Wealth… One Step at a Time,( ) written by Reed Armstead, to learn more about the relationship between money and happiness as well as keys to escape debt and build wealth. Reed Armstead, co-founded Debit Tracker, Inc. and now serves as the CEO running the day-to-day operations. With the responsibility for research and development to implement the best features for the product, he also takes responsibility for the overall direction of the company and its important advocacy strategy. Article Source: Article Source:

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