Bear with me while I tell a story.
I want you to picture a busy grocery store. Every line is backed up two carts deep and your grocery cart is full to the brim. You choose the closest lane and wait. As you wait, you do your best to distract your five and two year old children from the candy and toys the store so conveniently placed right at their eye level. After fifteen minutes in line, it’s your turn. You thankfully place your groceries on the conveyor belt and wait to find out the damage. After having a mild anxiety attack as the total cost racks up to $150.00 on the register screen and, as you regret the spontaneous purchases you made, you hand the cashier your debit card. She runs the card and politely tells you it has been declined. WHAT? You know you have plenty of money in there! You look around to see how many people are listening to the conversation and, after she tries it unsuccessfully for the second time, you dig frantically in your purse for your credit card because you just want to get out of there. At this point, the emotions frustration and embarrassment are running amok in your mind.
After unloading your groceries at home, the next item on the agenda is calling the bank to find out why on earth your card was declined. Upon calling the bank, the banker tells you a large check cleared your account this morning that caused an overdraft. This overdraft is the reason your debit card would not work. “What check?” you ask. “It appears your husband wrote a check to the lawn care company for $650.00. You are currently $50.00 overdrawn.” the banker states.
The response to this could be any of the following, “He forgot to tell me he wrote that check”, “I didn’t realize that would clear the bank so quickly”, or “I forgot to subtract that from my balance”. Any of these are perfectly valid and human responses. We all make mistakes, including the bank. It is how we handle these situations and learn from them that matters most.
Now, to the point of my blog. How can you avoid these situations? At TS Bank, we have several options for our clients to avoid this very situation. These options include:
- Low Balance Alerts: Our online banking clients can set up text or email alerts to notify our clients when their balance has fallen below a certain dollar threshold. This threshold can be set at any dollar amount. Downloading our mobile app to monitor your account on the go will also help you keep track of your available balance and view any pending items. Your mobile app currently displays two balances; current and available balance. Current balance is the balance at the end of the prior business day and does not take pending items into account. This is the balance that appears when you enable the Instant Balance option on your mobile app. Available balance includes all pending items posted to your account. In our situation above, this alert may not have been enough to prevent the decline since the check cleared the same day and the alerts only happen at the end of the business day.
- Sweeps: For our clients with a savings, additional checking or line of credit, TS Bank can tie your secondary account to your primary checking. Using our very vivid example above, if our client had tied her savings/secondary checking account to her primary checking account and the secondary account had adequate funds, her debit card still would have been declined. The sweep does not occur until the end of the business day when all debits have been presented for the day and one lump sum is swept in to the primary account to cover an overdraft. TS Bank recently removed our sweep fee so this service is absolutely free for our clients. There is no enrollment fee or ongoing sweep fees. In this same scenario, if our client had tied her home equity line of credit or personal line of credit to her primary checking account, and the line of credit had adequate funds, her debit card would have been approved. There are no sweep fees associated with a line of credit but interest rates and annual fees may apply.
- Overdraft Reserve: For those situations where there is not a secondary account or line of credit to draw from, and the unlikely event occurs that our client incurs an overdraft, TS Bank does offer Overdraft Reserve and Overdraft Reserve Plus. Overdraft Reserve is coverage for checks and ACH payments only. This does not include debit card purchases and would not have helped in our situation above. Our next question is whether they want Overdraft Reserve Plus which would allow clients access to Overdraft Reserve with their debit card. This means, since our client above was overdrawn approximately $50.00 at the time she bought her groceries, Overdraft Reserve Plus may have prevented the card from being declined. Full disclosure… the Overdraft Reserve and Overdraft Reserve Plus include overdraft fees and are discretionary services, meaning we may refuse to pay an item into overdraft. For instance, using our grocery store example, she was overdrawn $50.00 before she swiped her card. The additional $150.00 in groceries plus a $29.00 overdraft fee would put her at an overdraft of $229.00 (depending on overdraft limit). This service is by far the most costly option. Clients always have the option to NOT sign up for Overdraft Reserve Plus, have the card denied at the point of purchase and avoid any overdraft fees caused by debit card purchase.
We prefer to educate our clients to ensure they are leveraging the options we offer to avoid overdrafts. If an overdraft occurs, we are here to counsel you on your options, beginning with the most affordable. If you are not sure how to set up low balance alerts within online banking, you would like to set up a sweep or you are interested in Overdraft Reserve, please contact a banker at 844.487.3030 or stop into a branch. Take the first step to ignite your own prosperity and avoid overdraft fees!