Saving money without using the bank?

[Inkstain82]

I'm not going to call the banks "bad," but they are definitely in the business of trying to trigger fees. Once your checking account is flagged as a potential fee generator, they will begin messing with the timing of deposits and debits in order to try to trigger overdrafts. It's not realistic to tell a person living paycheck-to-paycheck to deposit their check but not spend a cent of it for a week while they wait to see if the bank has decided to credit it or not.

If you are in a situation where you can't stop overdrafting, a checking account probably isn't for you. I'd recommend keeping a savings account for check-cashing, but I'd rather pay $3 to Wal-Mart for a prepaid debit card and $5 in money orders each month than risk multiple $45 overdraft fees.

[cicy33]

In that case, I doubt I would bother with a bank account, except you still need to be able to write checks somehow. Otherwise you'd be stuck buying money orders for everything which would get expensive pretty quickly.

keep in mind I didn't say there was never more than 200 but after the bills are paid and what not there is rarely more than that left and usually less. we are not rich, we are surviving and hanging onto some money. I use a bank because I like direct deposit and I use my debit card everywhere. Our concern is not keeping cash because we have problems with banks. We don't generally. I can't remember the last time I had an overdraft. We are more concerned with having money in a bank that goes under. Even if the money is insured you have to wait to get it back. in the meantime you have no cash. none. Last week we had a major storm hit. no power for 4 days. the first two days there was also no atm or the few stores there were open accepting debit cards for more than 40 miles. We had a $20 bill. Used it to buy some ice and for the first time and in years realized what it really meant to not have money. There was money in the bank but couldn't access it. kinda scary!

[disneysteve]

Our concern is not keeping cash because we have problems with banks. We don't generally. I can't remember the last time I had an overdraft. We are more concerned with having money in a bank that goes under. Even if the money is insured you have to wait to get it back. in the meantime you have no cash. none. Last week we had a major storm hit. no power for 4 days. the first two days there was also no atm or the few stores there were open accepting debit cards for more than 40 miles. We had a $20 bill. Used it to buy some ice and for the first time and in years realized what it really meant to not have money. There was money in the bank but couldn't access it. kinda scary!

I've always said that everyone should keep some emergency cash on hand at home for just those types of occurrences. Even with ATMs, debit and credit cards, there are times when those things aren't available. It happens regularly after big storms. It happens in blackouts. Cash is king in those situations.

As a general comment (not directed at you cicy), overdrafts are NOT a problem with the bank but rather a problem with the user. It isn't the bank's fault if someone overdraws their account (unless it was due to some type of bank error, in which case the bank should correct it without penalty).

[Inkstain82]

As a general comment (not directed at you cicy), overdrafts are NOT a problem with the bank but rather a problem with the user. It isn't the bank's fault if someone overdraws their account (unless it was due to some type of bank error, in which case the bank should correct it without penalty).

When banks intentionally mess with the timing and order of deposits and withdrawals, I'd call that a problem with the bank, but it's one that wouldn't be a problem if not for the user-caused problem of living paycheck-to-paycheck.

But I've had this happen to me and others:

Have $20 in bank. Deposit $600 through a payroll check from a well-known local business. Wait four days. Go to gas station, supermarket and spend more than $20 at each.

A day or two later in the mail get a couple overdraft notices in the mail. Go to bank and request transaction logs, and it looks like this:

01/01 beginningofday Balance $20
01/01 noon Deposit $600 (not cleared) Balance still $20
01/05 noon gas station -$50 Balance $-30
01/05 12:15 grocery store -$100, balance $-130
01/05 12:30 overdraft fees, balance -$190
01/05 12:31 deposit cleared, balance $410

This would happen repeatedly (because I was naive enough to think it was a fluke the first few times). Every time, they would hold the funds on a local payroll check for as long as they possibly, legally could and hope that I'd try to spend some of it. The moment I did, they'd slap a few overdraft fees and then minutes later clear the check.

While this may be within the law and the user agreements, I'm not going to say they did "nothing wrong." That's pretty darn immoral in my world, and a good reason why many people who put themselves in bad financial circumstances learn to distrust banks.

[Staceyy]

Instead of keeping money in the house, I like to save our change (we save about $500 a year doing this), stockpile food (bought in bulk on sale), and pay our bills ahead. These methods keep our hands off the cash but ensure our bills are paid. We don't let excess money sit around to be frittered away, it immediately goes into buying excess food ,paper products, otc meds etc. or into paying our bills ahead. We also have payroll deductions for savings.

[cicy33]

When banks intentionally mess with the timing and order of deposits and withdrawals, I'd call that a problem with the bank, but it's one that wouldn't be a problem if not for the user-caused problem of living paycheck-to-paycheck.

But I've had this happen to me and others:

Have $20 in bank. Deposit $600 through a payroll check from a well-known local business. Wait four days. Go to gas station, supermarket and spend more than $20 at each.

A day or two later in the mail get a couple overdraft notices in the mail. Go to bank and request transaction logs, and it looks like this:

01/01 beginningofday Balance $20
01/01 noon Deposit $600 (not cleared) Balance still $20
01/05 noon gas station -$50 Balance $-30
01/05 12:15 grocery store -$100, balance $-130
01/05 12:30 overdraft fees, balance -$190
01/05 12:31 deposit cleared, balance $410

This would happen repeatedly (because I was naive enough to think it was a fluke the first few times). Every time, they would hold the funds on a local payroll check for as long as they possibly, legally could and hope that I'd try to spend some of it. The moment I did, they'd slap a few overdraft fees and then minutes later clear the check.

While this may be within the law and the user agreements, I'm not going to say they did "nothing wrong." That's pretty darn immoral in my world, and a good reason why many people who put themselves in bad financial circumstances learn to distrust banks.

Our bank does this. They do charges first and then do the deposits. I think that is wrong. If the deposit and charge were both there at the same time I don't see why they don't do the deposit first. I just try to make sure there is extra in the bank so that I don't have problems. We just moved and opened a new account. I have over $3700 and can't access it for 2 weeks cuz they are holding it for 9 business days. I don't mind really but geez NINE!!!! I can see five. What happened to faster check clearing? Or does that only apply to us and not businesses. All three checks I deposited were from established businesses.

[disneysteve]

I have over $3700 and can't access it for 2 weeks cuz they are holding it for 9 business days. I don't mind really but geez NINE!!!! I can see five. What happened to faster check clearing? Or does that only apply to us and not businesses. All three checks I deposited were from established businesses.

I have no idea why in this day and age with everything electronic it takes any time at all to confirm that a check is good. What about those systems that let businesses deposit checks by scanning them in and not even having to go to the bank. Isn't the whole point that the business knows instantly if the check is good? If you can do that, why does it take the bank even 3 days to verify a check?

[Inkstain82]

Our bank does this. They do charges first and then do the deposits. I think that is wrong. If the deposit and charge were both there at the same time I don't see why they don't do the deposit first. I just try to make sure there is extra in the bank so that I don't have problems. We just moved and opened a new account. I have over $3700 and can't access it for 2 weeks cuz they are holding it for 9 business days. I don't mind really but geez NINE!!!! I can see five. What happened to faster check clearing? Or does that only apply to us and not businesses. All three checks I deposited were from established businesses.

The deposits were there four days before the debits. Sometimes it was longer than that, I think our record for them pulling this stunt was eight. But magically, it would always be right after we had some debits.

[Inkstain82]

I have no idea why in this day and age with everything electronic it takes any time at all to confirm that a check is good. What about those systems that let businesses deposit checks by scanning them in and not even having to go to the bank. Isn't the whole point that the business knows instantly if the check is good? If you can do that, why does it take the bank even 3 days to verify a check?

In many cases, because they are hoping to manipulate the balance of the account into an overdraw. It's called "fee-based banking," and it's something the industry turned to in recent years.

[minnie1928]

I have no idea why in this day and age with everything electronic it takes any time at all to confirm that a check is good. What about those systems that let businesses deposit checks by scanning them in and not even having to go to the bank. Isn't the whole point that the business knows instantly if the check is good? If you can do that, why does it take the bank even 3 days to verify a check?

I'm wearing my flame retardant suit tonight so I'll take this one...Not all banks are running as "tech savvy" as others, so they are still pushing paper checks through their equipment, flying it to the Federal Reserve, the Fed processes it and then flies it to the originating bank that the check is drawn on. Say the check is bad, then the check has to go back in the reverse fashion to the original depositing bank. Banks aren't necessarily "verifying" the check, they are simply waiting to see if it comes back which can sometimes take several days.

Now, you mention the scanning of checks...yes, that is infinitely faster because instead of moving physical paper from one state to another they are simply transmitting electronic files with the check images. However, not all banks are doing this yet. As of a year ago (when I retired from banking) many/most of the smaller banks were not. However, it's definitely a growing trend.

I see many people saying that the check they deposited was from a reputable business (or something similar) as if to say that the business wouldn't write a check that would bounce. When the bank equipment is processing the work, it doesn't care who's reputable or not. The work is processed the same regardless of who wrote the check. All it sees is a string of numbers and that determines how soon you will receive your credit for the deposit.

When you open an account at a bank you should ask to see their schedule of funds availability. They are not all the same. The bank I used made the funds available the day after they were deposited. Another option is to have things directly deposited if possible, no clearing needed for these transactions.

[Inkstain82]

I'm fairly certain paper processing of checks is no longer legal.

[minnie1928]

I'm fairly certain paper processing of checks is no longer legal.

Since when?

[Inkstain82]

Since when?

Just looked it up, my mistake. I thought the Check 21 act required banks to use the electronic means, but it only gives them the option. Never mind.

Regardless, is the banking industry even denying that they fiddle with deposit clearing times to try to generate overdrafts on certain accounts? I was under the impression it was more or less an open practice called "fee-based banking."

[minnie1928]

Just looked it up, my mistake. I thought the Check 21 act required banks to use the electronic means, but it only gives them the option. Never mind.

Regardless, is the banking industry even denying that they fiddle with deposit clearing times to try to generate overdrafts on certain accounts? I was under the impression it was more or less an open practice called "fee-based banking."

Will they deny it, h*ll yes! However, not all banks are this scrupulous. That's why you need to look at the funds availability notice. Like I said, my former bank gave you credit the next day regardless of where the check came from. I think the "big boys" behave differently than the smaller community banks.

I'm not saying that banks don't use it to their advantage, I'm just saying that there is legitimate amounts of time necessary for paper checks to clear and that it can be several days (or longer in some circumstances). The banks may also be using this as a tool to prevent losses from kiting. It really depends on each bank and their experiences. My bank very rarely lost money in kiting and maybe that's why we were lenient on the availability.

[Inkstain82]

The funds availability notice will generally say they can hold it for as long as legally allowable for any reason they please.

It's not a question of legality, of course they have the right. At issue is whether the the time it takes to clear deposits is based solely on the process itself, or whether the banks are intentionally manipulating it to create overdraft fees for certain clients. I think the answer is pretty clearly the latter.

Find two people with a checking account at a major national bank. One has never had an overdraft, one has had five in the past six months. Have them both deposit a check from the same source at the same time at the same branch, and see whose deposit clears first. The customer who has been identified as a fee generator will not see their deposit cleared until at least a few days later than the good customer, if not longer.

The wife and I found the best way to get around it was to simply cash the check, drive down to another branch and deposit the cash. It was pretty asinine that this could make a seven-day difference in availability, but it did.