Don’t Rely Too Much on Online Banking

Posted by: Meredith K. | Jan 07,2008


One reason people seem to like debit cards is that they do a lot of the work for them.  I’ve heard people justify that they don’t really need to balance their checkbooks because all they have to do is check their bank account.  Debit card transactions are itemized so there is no real reason to count every dollar.  

Wrong.  For one thing, using this model will mean you’ll overspend and not save any money month by month.  It’s this kind of thinking that leads to getting into high credit card debt without another thought.  In addition, an online bank statement does not calculate your bank account in real time.  It can take days for your bank account to register checks you’ve sent out to utility companies and the like, so your online bank account will not be a fair representation of what you’ve got in the bank.  

There’s one other issue: you can overdraft on a debit card.  Most don’t realize this is the case.  They think overdrafting is only a problem with credit cards.  Debit cards are valued as cash and a bank won’t let you draw more cash than you have.  Not true: they will and they’ll do it for a fee.  You could buy a 50 cent candy bar via debit and it could end up costing you $30 in overdraft fees.  

Relying on online banking to do the work for you just isn’t the best idea.  There’s one simple truth: the more you count your money, the less you’ll spend.  If you’re just handing over a plastic debit card wherever you go, it turns money into a pretty abstract concept.  If you’re actually counting dollars and cents, each purchase will have more meaning and you’ll be less likely to spend frivolously.  Let’s set aside for a moment the issue of overdraft fees, as you might never approach zero into your account.  Using online banking or checking an ATM to see how much you have, without factoring checks that have been recently sent out, is poor money management and will result in your spending money you should be saving.  

Sponsored Resources Ads by Google