In my last post I talked about very nearly overdrafting my account. It would have been more embarrassing than anything else had it happened—I haven’t overdrafted an account in over two decades—but it wouldn’t have caused any big problems. I would have paid the fee and moved on, with only my pride bruised.
But there was a bit more to the story than that, in terms of why I ended up being okay. It actually had nothing to do with me, and all to do with an error made by another entity.
This could very easily happen to you too, so it’s important to read on.
Table of Contents
Automated bill pay
I pay bills automatically. Often, I use ACH, the electronic check service where a company withdraws directly from my account.
There are many who might say that giving out an account number, even to an automated service, is foolish. They would suggest using a debit card linked to the account (or even a credit card).
I don’t think there’s anything wrong with using a debit card for bills. You do technically get an extra layer of fraud protection (via Visa).
But in all my years of paying bills automatically, I’ve never had a rogue agent with my account try to extract more money than was owed.
But mistakes can happen.
One of my bills, a $275 monthly payment for an office rental, is withdrawn on the 2nd of every month. I have never once had a problem with this payment in almost a decade.
Except this time, for some unknown reason, this service pulled my account for payment … twice.
And I didn’t notice.
So, in this case, I believe that the reason why I didn’t get hit with an overdraft charge is because the payee reversed the second charge the very next day, right when I would have gotten hit.
That was good timing for me, but it was way too close.
Automated money reserves
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Float is insurance. Insurance costs you money.[/perfectpullquote]
If there is one lesson to pull from this, it’s that you can always have more float in your account. Any extra just protects against the unexpected.
For those who don’t want lots of money sitting around in your account, earning very little (as most checking accounts don’t earn much at all) might feel like a waste. “Wouldn’t it be better to invest this money?”
No. Float is insurance. Insurance costs you money.
I like the idea of having enough float in your account to be able to handle paying every bill and expense on the first of the month without any problems. That might seem like a lot, of course, but when a company decides to erroneously withdraw more money than they should, or any other unexpected situation occurs, you’ll be glad you had some insurance.
But enough about me. Have you ever had an unexpected or erroneous withdrawal from your account? What happened, and what did you do about it?