subject: Avoiding Bank Fees [print this page] Why should you worry about issuing a bounced check? For one thing, issuing a check that isn't backed by sufficient funds will give you a number of penalties, including a bounced check fee from the bank and an overdraft fee. You'll also be penalized by the establishment you gave the check to. Here are just a few ways to help you avoid paying penalties for bounced checks:
You have to manage your checking account well. This means that you'll need to regularly and constantly track what goes in and out of your account by documenting these transactions in a computer spreadsheet program or on paper. You'll have to update your records every time you do anything with your account. ATM withdrawals, debit card purchases, or direct payments with your account all need to be jotted down in your personal records, as you should with every check you write. The logic behind documenting all these things is to help you ensure that you'll have ample funds in the checking account and avoid it from getting overdrawn.
If your account is overdrawn, your bank will do one of any of these things: pay for what you owe even if you don't have enough in the checking account (giving you an overdraft penalty), return the check because of insufficient funds without paying a dime, and charge you a penalty for a bounced check (which the merchant and the bank can do).
These fees can be avoided simply by diligently noting what you do with your checking account in your records (and writing down each one immediately), while adding how much you pay to facilitate these transactions. You should also include direct debit payments and online payments in your notes.
After receiving your monthly statement, compare it to what you've recorded - this tells you which issued checks have or haven't cleared yet. If you see any discrepancies, resolve these as soon as you can by depositing ample funds into your checking account, for instance. Linking a savings account to your checking account can also fix these errors when they happen by automatically channeling funds to the checking account. You may also apply for bank credit and establish an overdraft limit, which enables the bank to cover your expenses in case of an overdraft or bounced check.
by: Carina Smith
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