The newer forms of payment are appealing because they’re faster and more convenient than sending checks through the mail. But more importantly, they’re also safer.
In general, paper checks pass through more hands during processing than electronic payments do. They may also sit in a file drawer or warehouse for months or years.
So with all the safer and more convenient forms of payment available today, it’s best to leave your checkbook locked away.
Set Up Direct Deposit
Find out if your employer offers direct deposit or payroll deduction if you don’t already take advantage of this feature. Direct deposit is an electronic payment from one bank account to another. For example, money may move from an employer’s bank account to an employee’s bank account. However, there are several other ways to use direct deposit. To complete transfers, banks use the Automated Clearing House (ACH) network, which coordinates these payments among financial institutions.
Authorize Electronic Payments
With electronic payments, you can pay every bill you have using one or more automated options:
• Regular, uniform payments that will continue for a long time (ex. mortgage): Authorize a creditor (such as your credit union) to take money directly from your checking account using the Automated Clearing House (ACH). You can also set up direct deposit or payroll deduction to be made directly to your mortgage, possibly saving you money if weekly or bi-weekly payments are made.
• Bills that only pop up annually, semi-annually, or that change in amount: Ask if you can set up monthly payments from your checking account or credit card. That way you won’t have to come up with the full amount at one time. Just remember to pay your credit card in full when the statement arrives.
• Bills from vendors or service providers: Use your checking account or online bill pay for regular monthly bills. With bill pay you can set up payments 24/7, adjust payment dates to jibe with your paydays, and make optional extra payments when you want.
Automate Routine Savings
Set up direct deposit, payroll deduction or automated transfers to your savings account(s), and you’ll be financially ready for an unexpected or emergency expense. You can also deposit to an investment account or children’s savings account to continue to build your savings.
To make sure you’re never penalized for overdrawing your checking account, set up an overdraft protection savings account or line of credit at your credit union. Overdraft protection is an option offered in credit union accounts that prevents check, ATM, or debit card transactions to cause a user’s account balance to fall below zero, thereby triggering an overdraft fee or a non-sufficient funds (NSF) fee.
Track at Your Convenience
Once you’ve automated your finances, use your credit union’s online banking option and mobile services to track your accounts and transfer money between them. Check accounts frequently to make sure your automated plan is working the way you want, and to monitor it for attempted fraud or ID theft.
Source: Credit Union National Association (CUNA)