Automatic withdrawal is like playing a banking game of Russian roulette
I've been writing about bank fees for WalletPop quite a bit lately (like in this post and here), and while the fees themselves are egregious and punitive beyond belief, it is helpful to remember that quite often, the reason the fees are being lodged is that the bank user screwed up.
In my case, I knew something was up with my bank account when my wife called me from her cell phone and asked: "Did you know our checking account was $50 in the negative?"
From the agonized scream that followed, my wife said, "I'm guessing not."
I mumbled something about needing to have a nervous breakdown, hung up and checked my bank web site. My head was spinning because I had received a paycheck in the mail the day before but hadn't gotten around to depositing it in my account. While I normally rush to the bank to deposit any cash on hand, I hadn't, knowing full well my account was well padded.
And sure enough, it would have been, except there it was: $119 automatically withdrawn from my account. One year ago, when paying for an online newspaper archive service (handy for journalists, or at least this one), I apparently had clicked an "automatic withdrawal" box. What I was thinking, I'll never know, although I suspect it was some sort of optimistic belief that went along the lines of: Oh, that's a year away, and by then, the public will have noticed my book, and it'll be a runaway best-seller, and $119 missing from my account will be no big deal...
Whatever I was thinking, I wasn't thinking.
In this instance, I lucked out. What sent me into the negative was a car payment I had scheduled to go through on Tuesday, and after talking to the bank teller, I quickly learned that if I took my check to the bank that day, I'd avoid any overdraft fees. And so I avoided my nervous breakdown and managed to get through the day without any bank charges. But, boy, if there had been bank charges, and from what I can tell, there would have been quite a few of them, I would have been furious -- and would have had no one to blame but myself.
And so my mini horror story got me to thinking about the other automatic withdrawals I have coming from my account. I still subscribe to a print newspaper (somebody has to), and The Cincinnati Enquirerwithdrew its money from my bank account a couple months ago, and since I had completely forgotten that was coming, the missing money momentarily gave me a near heart attack. Around Christmas, my wife signed my kids up for some online computer game web sites that wound up doing automatic withdrawals near the end of the month. In the beginning, I forgot about those, and so that threw me a little.
Then, of course, I have my car insurance payment automatically withdrawn each month, which I see as a smart move, and our family's YMCA membership is yet another monthly automatic withdrawal. And as automatic withdrawal gets more popular, especially if you forget that you've agreed to have some money disappear from your account once a year, or three times a year, things can get complicated.
Even if you do remember, it gets complicated. I'm starting to wonder what was so wrong with the old-fashioned way of budgeting the old-fashioned way and paying bills on my terms, rather than another company's.
Obviously, businesses have a vested interest in convincing the consumer to agree to an automatic withdrawal. It ensures that the company will have a regular customer who pays on time. I have no problem with that when it's a vital service like my car insurance, but much as I like the newspaper archive service that I pay $119 a year to use, I would have lived had there been interrupted service for a few days, or even a couple months. It's a nice service that helps me do my job, but it's hardly a crucial one.
The more automatic withdrawals I wind up accepting, in order to make things easier, the harder I'm finding banking to be. I plan on taking another look at just what's coming out of my bank account and withdrawing a lot of my automatic withdrawals.
Geoff Williams writes a lot about banking and other money issues for WalletPop. He is also the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale).