For the first time in my life I bounced my bank account. When I logged into my account I saw that not only had I over-drafted my account, but that I did it twice, and thus was subject to twice the fees. We are doing pretty good financially, so how on earth did I manage to bounce my bank account? Like most events, there are several contributing factors.
Factors of How I Bounced My Bank Account
Factor 1: My bank closed down my local branch this summer.
This was a huge factor in this situation. This summer my bank sent us a letter stating that in two weeks our local branch would be closing. The next closest branch is over 45 minutes away. I started switching over our automatic payments to a second bank account that I have with another institution. Mid-way through the process I found out that I could electronically transfer funds between these accounts, so when I get my checks I can deposit them at my local bank and transfer them to the bank which shut down. I decided that I could actively manage this situation and gave up on transferring all of my automatic payments. Now instead of all my deposits and automatic withdrawal coming out of my primary account, I had automatic withdrawals set up, but I needed to take action to transfer money into it.
Factor 2: How Mrs C. and I set up our accounts:
We keep our emergency fund in Mrs. C.’s account, but since my earnings are roughly 90% of our yearly income all expenses and retirement/ HSA savings are taken out of my account. With our cash buffer completely in another account, our primary checking account is more susceptible to running low.
Factor 3: Longest period of time without a paycheck.
There isn’t much nuke work in the summer, so I was off work for 4 months. When I returned to work in September my first week was a partial week and my employer pays us every two weeks, with a one week delay. When my first full two week paycheck arrived I was at the furthest point from a full paycheck I had ever been in my life, a full 4 months. I bounced my account on Sunday night then on Monday received my paycheck which was worth about two months of expenses.
Factor 4: Not paying attention: Working 72 plus hrs
I was so accustomed to just sliding my primary checking card to pay for things that I lost focus on the fact that it was running low. Mrs. C. also has a card to this account and uses it to pay for most purchases as well. I clocked in over 72 hours per week for the two weeks preceding my bank account bounce, and the day it bounced I was working my final day at one site before travelling to the next one. My bank account balance was the furthest thing from my mind. I had logged in to my account to see if a specific transaction had gone through and was caught by surprise when I saw a negative red number.
Fees Incurred When I Bounced My Bank Account:
My credit union automatically charges a $30 for every bounced transaction. I use my card for everything and it isn’t uncommon for me to slide it a half dozen times in a day, many of these for small dollar transactions. A $5 lunch can then cost 600% more if a $30 charge is added on, YIKES. When I noticed I had bounced the account I had already received two $30 fees, goodbye $60 in stupid tax. I then noticed that I had another transaction pending, which would bring my total fees up to $90. I instantly transferred over $500 from my other bank account, but then learned that it can take up to 5 business days for the transfers to go through. In the next 5 days I would probably have at least a half dozen more automatic transactions, I certainly couldn’t risk adding another $300 in fees.
Resolving A Bounced Bank Account
Thankfully, Mrs. C. had the time and the patience to deal with the bank for me. She called them up and since our account has been in good standing for several years they waived the two fees I had incurred and explained to her the easiest way to get money directly in the account without a hold and without having to drive 45 minutes to the nearest branch. She downloaded the mobile banking app and wrote a check to herself from our other bank account and snapped a picture of it. They normally have a limit of $200 for a personal check to clear instantly, and the rest would have a hold on it, thankfully they temporarily lifted this limit to $1,500 for her and we were able to transfer the money that could immediately clear without incurring any more fees. She then deposited my paycheck as well which got us out of the woods. Effectively, one 10 minute phone call saved us $90 in fees.
Avoiding A Bounced Bank Account
For almost 12 years of being an adult I have managed to avoid bouncing a bank account, while most of the time having far fewer resources than I have now. When it boils down to it, I got careless with putting my finances on autopilot because we are overall running large surpluses. Regardless of how much money you make or how much money you have saved it is still possible to bounce a bank account. We are now keeping a much better eye on our accounts and we are building up a sizable reserve of cash in that account as well to ensure we have an appropriate buffer.
I have a Personal Capital account that keeps track of all my bank accounts and investment accounts on one screen and is a great tool for knowing where you stand in a quick instant. I certainly need to sign in to this more often especially when working on the road.
If I did have to pay the $90 in fees it would have been a minor annoyance, but 10 years ago $90 in fees would have been devastating. On a good week I was earning $200 after taxes, which doesn’t stretch very far. $90 in fees would have cancelled out almost half my paycheck. Avoiding a bounced bank account is much more important for lower earners than for higher earners. It is much easier to do because lower income earners tend to have account balances closer to zero than high earners, and the fees that get added in represent a much higher percentage of income. With 62% of Americans having under $1,000 in their bank accounts, vigilance is extremely important to keep from bouncing an account.
Have you ever bounced a bank account, If so how much did the fees set you back?