Debit card use is growing. Debit card payments accounted for 43% of 110 billion transactions in 2011, an increase from 19.4% in 2003, according a study from Moebs Services, Lake Forest, Ill. That was the year that the Check Clearing for the 21st Century Act (Check 21 Act) was enacted. Check 21 eliminated the “float” on checks that kept many consumers from overdrawing their accounts.
The lack of float and increased debit card use has made the time between initiating payment and depositing payment almost nonexistent. With 87% of checking account users not reconciling their checking accounts, the probability that the average consumer will overdraw is immeasurably increased, according to the Moebs study.
Though credit unions’ median charge for an overdraft is less than the national median for all financial institutions, and is much lower than what Wall Street banks charge, you can avoid overdraft fees altogether by using some simple money management skills:
* Check your balance regularly online and link your Priority First savings account to your checking account.
* Even if an overdraft is rare in your household, it can happen to the best money managers. Make sure you can cover any inadvertent overdraft with a direct transfer from your savings account.
* If you live paycheck to paycheck, as two-thirds of households do, consider transferring some money from savings to your checking account until outstanding transactions clear. When you no longer need the cushion, move the money back into savings.
* Talk to the professionals at Priority First FCU. We’re here to help you get back on track with your finances and can help you set up a spending plan that will work for you.