Spring cleaning for finances: how to stop bouncing checks
If you frequently find that the checks you write or the debits you charge are hitting your bank account like a trampoline, you need to take steps to stop. Returned check fees are some of the highest bank fees that a private individual can be charged, and once you get caught in the cycle of paying the fees and the fees because you can’t afford the fees, it can be next to impossible to get your finances back together. If you’re stuck in the trap of returned checks, try these strategies to get your finances back under control.
Ways to Prevent Your Check Bouncing
1. Start using cash. If you tend to forget when and where you swipe your debit card, withdraw a set amount of cash from an ATM every week. Pay your bills on the same day, then subtract this amount from your bank statement. Divide the remaining cash in your account by five, then withdraw one of these parts every week until it’s time to pay bills again. The fifth amount will be left in your checking account to act as a buffer against any unintentional purchases or forgotten bills.
2. Deposit 10% of your paycheck in your savings account. If you can leave this money alone, this is a great strategy for building up an emergency fund quickly. If you do need to access it to pay bills, try to leave as much as possible in your savings account until you absolutely have to withdraw it to pay a debt. Having money in your savings account will give the bank another account to draw money from. Usually, that means a small overdraft protection fee instead of a large returned check fee. As an added bonus, no one will know that the money was pulled from your savings account but you.
3. Transfer 50% of what is left in your checking account the day before payday to savings. If you tend to bounce checks after you pay your bills, this is a good way to build your savings without feeling deprived. Watch your spending carefully for one pay period. Even if you just have a few pennies left over, transfer half of it to savings before you get another infusion of cash. Pretty soon you won’t have to track everything because you’ll have a cushion built up.