Checking Accounts

You Write The Check and Then What?

June 7, 2016 By Twila Van Leer

Checks are electronically scanned as part of the process.

Americans are writing fewer checks than ever as more of them handle their money matters electronically. Even so, some 18.3 billion checks were processed in a single year in 2012. Many people still feel checks give them more control over their personal finances.

Ever wonder what happens to a check after you pass it on to a merchant, family member, utility or whatever?

What happens depends to a large extent on who receives it, with different routes if it is handed to an individual vs. a business. Though some businesses and individuals still deposit checks with a financial institution in person, most are processed electronically, economic experts report.

Electronically Processed Through Scanning Devices

The checks are fed through a scanning device that takes pictures front and back. The image, along with metadata and account number, is then forwarded to the paying bank. Today’s scanners are designed with optical character recognition that reads the information on the bottom of the check and the handwritten or printed amount of the payment. Even small scanners can process about 45 checks per minute. Larger ones handle hundreds or even thousands in the same time frame.

For such a small piece of paper, a check contains a significant amount of information, at least nine pieces of data in most cases. They include the date on which it is written, the recipient, the amount of payment in both figures and words, a memo to specify what it is intended for, which is optional, your signature, the routing number, checking account number and the number of this single check.

The line of information at the bottom of the check includes numbers and symbols that give the bank routing and transit numbers, the customer account information and individual check numbers. In the business, it is known as the MICR line, an acronym for “magnetic ink character readable.”

Smart Phone Apps

Many smartphones have apps that can turn a paper check into an electronic image. They take pictures, via the phone camera, front and back of the check, and transmit the pictures to the bank when the check is deposited.

When a bank receives the image, the check can be processed or cleared, through the Federal Reserve Bank’s national clearinghouse, a regional clearinghouse or a direct connection between two financial institutions.

The number of checks processed in this manner has increased significantly. In 2006, 43 percent of them were scanned and electronically handled. By 2012, the figure was almost 100 percent.

What If You Lack Sufficient Funds To Back The Check?

It will be processed, again electronically, and returned to the back on which it was written. More than 127 million “bouncers” were returned to the bank of origin in 2006. Again, by 2012, the number had fallen by almost half, with just 66.4 million returned unpaid.

Although electronic banking will likely continue to make inroads into check transactions, it’s still a great way to handle your money affairs.

Wal-Mart Offers new GoBank Accounts Sans Overdraft Fees

October 8, 2014 By Sherry Tingley

Walmart Is Offering Pre-Paid Debit Cards — Walmart Is Offering Reloadable Pre-Paid Cards

Joining other large retailers that engage in semi-banking practices, shopping giant Wal-Mart has opted to provide a card-based program for customers who may overspend their accounts while purchasing in their stores.

The world’s largest retailer had teamed with Green Dot Corp., a leader in creating reloadable prepaid cards. New mobile checking accounts issued by Wal-Mart under the cooperative effort will not require fees for overdrafts and bounced checks. An $8.95 monthly fee will be charged for these GoBank accounts. The fee is waived if there is a deposit of $500 or more each month.

Accounts can be opened by purchasing a $2.95 starter kit at any Wal-Mart Store. A smartphone is a necessity, since most of the banking transactions are done through an app. Credit Bureau ratings commonly used to determine eligibility are not part of the application requirements. The idea behind GoBank is to provide options for people who don’t have a lot of money and may have poor credit scores.

The kit includes a MasterCard debit card that can be used to withdraw money or make purchases. No fee is charged for ATM withdrawal services at the 42,000 locations around the country. If money is withdrawn from ATMs outside the system, a $2.50 charge is levied. A 3 percent fee is added to withdrawals outside the United States.

The new arrangement is one of several moves being made to help Americans who are still feeling the effects of the recent recession. Both Bank of America and Citibank have begun offering fee-free accounts this year.

Regulators have been looking more closely at overdraft fees, which in some instances can go up to $35 per incident. The regulators have responded to concerns by requiring banks to get written approval from a customer to provide overdraft protection, which allows a customer’s account to dip below zero. Those who choose to have the overdraft protection still pay high fees. Some customers at large banks regularly rack up fees in the neighborhood of $260 a year, according to the Consumer Financial Protection Bureau.

Wal-Mart’s Daniel Eckert, senior vice president for services, said GoBank was the retailer’s response to customer concerns that regular banking fees are too high.

ATM Fees, Overdraft Fees Add Costs To Poor Financial Planning

September 29, 2014 By Sherry Tingley

ATM Bank fees are on the rise again. The average cost for ATM withdrawals out of network is now $4.35 per transaction. Bankrate.com completed their 17th annual Checking Survey and reported that average ATM charges have risen 5% over the past year.

ATM Charges

Greg McBride, Chief Financial Analyst for Bank rate reported that ATM fees and overdraft fees go up year in and year out. The average surcharge for out-of-network ATM withdrawals have risen 6.5% for the 10th year in a row of increased fees.

ATM fees are the price you pay for not planning ahead to get to an in-network ATM or for picking a bank that doesn’t have ATMs close to where you live or work. There are smart phone apps that will help consumers find the nearest in network ATMs to help you avoid these fees. Consumers can take comfort in the fact that with a little advanced planning, they can avoid any bank fees completely.

There are actually two fees that can be charged to the customer using other banks ATMs. One fee is charged by the bank that owns the ATM and another fee is charged by the customers own bank. Both of these fees have gone up. Together these fees can be as high as $4.35. That represents an increase of more than 5% from last year.

The cities with the highest ATM fees in the nation are Milwaukee, Phoenix, Houston, Cincinnati, San Francisco and San Diego.

Overdraft Fees

For the 16th consecutive year, overdraft fees have risen with the average cost at $32.74 per transaction.

Consumers can choose what type of overdraft protection they want to have on each account. Without overdraft protection debit card transactions that create insufficient funds can just be declined without any overdraft fees. This cannot be done for automatic withdrawals like mortgage payments.

Limit Your Expenses

Limiting these types of bank fees is always within the reach of the consumer. Smart phone apps can be set to alert you when you have reached a minimum balance. Apps can also point you to the closest ATM for your particular bank. These kinds of fees are basically the result of a “sloppy financial habit,” says McBride.

Free Checking? Try A Credit Union

July 9, 2014 By Twila Van Leer

Finding a financial institution that offers free checking is usually not hard, and many credit unions are joining the ranks, making it even easier. And the fees associated with checking where it isn’t free are plateauing, according to an article in Bankrate.com.

The 2014 Credit Union Checking Survey conducted by Bankrate reported that 72 percent of the country’s 50 largest credit unions charge no monthly service fee and apply no fees to point-of-sale transactions.

Free checking frees up money to spend elsewhere.

The figure is slightly down from the 78 percent posted in 2010. The continuing trend, however, is good news, showing that free checking is a staple at most credit unions and there is no indication that that will change.

In contrast, banks appeared moving in the opposite direction, with a drop among the institutions offering free checking from 76 percent in 2009 to 38 percent in 2013, Bankrate reported.

Some banks, while charging a checking fee, offer an offsetting opportunity. For instance, Alaska USA Federal Credit Union in Anchorage waives its $5 monthly fee if the customer uses direct deposit into a checking account. Others drop the fee if the consumer agrees to e-statements or maintains a minimum balance. With these trade-offs factored in, the number of free checking amounts rises to 96 percent.

That makes the talk about the demise of free checking moot, says Greg McBride, one of Bankrate’s analysts.

Credit unions have incentive to offer free checking, since they are not-for-profit cooperatives with obligations to members, rather than stockholders. There is a sense of providing service to members whereas banks are concerned with profit-making. Free or low-fee accounts are a matter of pride with the non-profits. It’s an attitude that is core to their business.

Bankrate also looked at other fees related to credit union banking and found that most of them are holding steady.

About 30 percent of the credit unions in the survey either had no fee associated with using an out-of-network ATM or allowed up to five uses per month of those ATMs.

Overdraft fees have risen slightly at the credit unions, according to the study, from an average of $26.74 to $26.9. The average bank fee for overdrafts is $32.20, while those who exceed their credit union balances commonly pay $25 to $30.

Surcharge fees paid by nonmembers to use a credit union’s ATM went up 5 percent between surveys, now standing at an average $2.41. Since 2010, such fees have risen by 20 percent, and it appears likely that the non-member usage will continue to see increases, industry leaders say.

Credit union membership has increased by more than 8 percent since 2008 and assets have grown by more than 30 percent. The financial crisis that hit the country a few years ago likely pushed the increase. As consumers began to feel “fee fatigue” more frequently, they took new looks at the historic benefits of credit unions and either switched from their banks or added a credit union to their financial options.

While current no- or low-fee offerings are expected to continue, credit unions are feeling the effects of a long period of low interest rates and other financial factors, as are their competitors. All financial institutions will continue looking at fees and evaluating services and offerings, industry leaders say.

Buy Cheap Checks To Help With Family Budgeting

December 27, 2012 By Sherry Tingley

In these days of austerity, we are all looking to save money. Many families and businesses are now turning to alternate sources to buy cheap checks . Ordering them from your bank is costly and may take a long time to arrive. Banks seemed to have a monopoly on this business, however check printers are leveling the playing field.

Today, with so many online check printers offering pre-built templates for check designs, you can customize and personalize your checks in a variety of ways. Add personal messages. Put in a picture or photograph. Set up your own background. But before you do, here are some tips that you need to keep in mind when ordering your cheap checks online.

It’s true what they say about electronic payment systems – that they are fast catching on to replace paper checks. However, many families still use paper checks, some because people don’t trust debit cards and technology. But many of us stick with the trusty old check by choice. It gives us a paper record of our transactions and to be able to write a check is quick and easy.

Cheap Checks

Start out by searching for “cheap checks” online using your browser or any other search engine tool. If possible, use search criteria that will narrow the search for you. For instance, look for “cheap checks” in or near “your home town.”
Check out the quality of the website. You will need to spend some time browsing throughout the site to make sure you are comfortable with what the website says about the company, their products and their service. If you aren’t satisfied, skip this vendor and move on to the next!
Consider only companies that have been in the check printing business for many years. The longer the better.
Make sure there is a phone number available on the website. Even if you are not sure that you will be using them, call the number – several times if you must – just so you get a “warm and fuzzy” about the vendor.
Before calling, be prepared with a series of questions: Who are they? How long have they been in business? What areas do they service? Where are they located? What products and services do they provide? What are their charges? What are their delivery and return policies? Even if this information is available on the website, it doesn’t hurt to clarify them in person on the phone.
Usually, companies offering checks have a certain set-up cost associated with each order. If you order in bulk, then they may be able to give you added discounts.
Make sure you inquire about shipping policies. What carrier do they use? How long will it take to deliver? What if you are not home when the package arrives? Also, if you order in bulk you may qualify for free shipping.
Before you order, have your checking account number and your bank/branch routing number ready.

Cheap checks are no longer cheap looking checks. Go ahead and order your checks now and save up to 50% off your bank’s rate!