Auto withdrawal from a checking account

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KlangFool
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Re: Auto withdrawal from a checking account

Post by KlangFool »

CRC_Volunteer wrote: Sun May 15, 2022 7:21 pm
KlangFool wrote: Sun May 15, 2022 7:03 pm
CRC_Volunteer wrote: Sun May 15, 2022 6:59 pm
KlangFool wrote: Sun May 15, 2022 4:38 pm
Doctor Rhythm wrote: Sun May 15, 2022 4:31 pm I use auto-pay from my checking account for recurring bills that can’t be put on a credit card. And I use auto-pay to pay my credit cards, so ultimately almost all our expenses are paid through auto-pay. AFAIK, it’s alway a pull, never a push. I feel it is “safe enough” for my situation that I don’t worry about it.
So, one wrong pull of 10K from one of your bills would break the whole system.

KlangFool
We had a situation where the banks were marking checks as NSF. in one case, the county prosecutor filed charges against one of my co-workers when he had more than enough funds in his account.

Any system can break - even yours when you get older and CRS (Can't Remember S**t) takes hold. The sky isn't falling...
CRC_Volunteer,

My system works even if I "do nothing" for a few months. And, with only push payment from the bank, no one can pull any amount from my checking account. I do not have debit card either.

I only push payment from bank. There is no pull.

KlangFool
Water, Electricity, Insurance are not going to wait a "few months" before they are paid.

My Flex Spending check from my company (6000+ employees) "bounced" when I deposited it. Finance had a time explaining that one.

Auto draft works seamlessly and is quite reliable. And this is in a state where a major data breach in 2012 got everyone's electronically submitted tax returns going back over a 14 year timeframe. And the data was not encrypted...
CRC_Volunteer,

"Water, Electricity, Insurance are not going to wait a "few months" before they are paid."

I push my payment to Water and Electricity. As long as I am willing to pay more, there is no problem. And, I carry one month of credit. So, even if the bank's auto payment failed, it would be fine for at least one month. Insurance is paid by credit card. I push my minimum payment to credit card.

I only need to do two optional push payment to my two credit cards every month.

"Auto draft works seamlessly and is quite reliable. "

If I do not need to trust the system to work correctly, why should I?

KlangFool
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Stinky
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Re: Auto withdrawal from a checking account

Post by Stinky »

My steps:

1. Use credit cards for monthly bill payments whenever possible. I use the Citi Double Cash card and get back 2%, which is larger than the fees charged by utilities.

2. Reconcile my checking account, most every day

3. Reconcile my credit cards, most every day.

4. Have alerts set for any transaction over $0.01 on both credit cards and checking account

Works like a charm for me. And I make a little money every month on the cash back.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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CRC_Volunteer
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Location: Southeast USA

Re: Auto withdrawal from a checking account

Post by CRC_Volunteer »

KlangFool wrote: Sun May 15, 2022 7:28 pm
CRC_Volunteer wrote: Sun May 15, 2022 7:21 pm
KlangFool wrote: Sun May 15, 2022 7:03 pm
CRC_Volunteer wrote: Sun May 15, 2022 6:59 pm
KlangFool wrote: Sun May 15, 2022 4:38 pm

So, one wrong pull of 10K from one of your bills would break the whole system.

KlangFool
We had a situation where the banks were marking checks as NSF. in one case, the county prosecutor filed charges against one of my co-workers when he had more than enough funds in his account.

Any system can break - even yours when you get older and CRS (Can't Remember S**t) takes hold. The sky isn't falling...
CRC_Volunteer,

My system works even if I "do nothing" for a few months. And, with only push payment from the bank, no one can pull any amount from my checking account. I do not have debit card either.

I only push payment from bank. There is no pull.

KlangFool
Water, Electricity, Insurance are not going to wait a "few months" before they are paid.

My Flex Spending check from my company (6000+ employees) "bounced" when I deposited it. Finance had a time explaining that one.

Auto draft works seamlessly and is quite reliable. And this is in a state where a major data breach in 2012 got everyone's electronically submitted tax returns going back over a 14 year timeframe. And the data was not encrypted...
CRC_Volunteer,

"Water, Electricity, Insurance are not going to wait a "few months" before they are paid."

I push my payment to Water and Electricity. As long as I am willing to pay more, there is no problem. And, I carry one month of credit. So, even if the bank's auto payment failed, it would be fine for at least one month. Insurance is paid by credit card. I push my minimum payment to credit card.

I only need to do two optional push payment to my two credit cards every month.

"Auto draft works seamlessly and is quite reliable. "

If I do not need to trust the system to work correctly, why should I?

KlangFool
To your final question and my previous response. One day CRS will arrive...

I have enough going on, that the things that can automagically be handled, will be so. We each have our own approach and I will leave it at that.
"Let me explain. No, there is too much. Let me sum up." (Inigo Montoya) | | 65/30/05 | 53% VTSAX | 12% VTIAX | 30% VAIPX | 5% CASH
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southerndoc
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Re: Auto withdrawal from a checking account

Post by southerndoc »

I find ACH no more of a risk than someone just taking your routing and account number off a check. I know of one individual who had money stolen from his account after someone ordered checks in his name, their address, and his routing/checking account number. He lost several thousand before they were able to catch the person.

I don't believe there is as much protection against lost money with checks like there are with credit cards. The Uniform Commercial Code states that if a person doesn't use "ordinary care" to protect checks, signatures, etc., then the bank may not be held liable. Even more worrisome, if you choose to order cheaper online checks that don't have a security feature when the bank offers such a feature with their checks, then the bank may not be held liable for your negligence. The Check 21 Act reduced the "float time" of a check down to 24 hours after being submitted to the bank for deposit/cash.
MikeG62
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Re: Auto withdrawal from a checking account

Post by MikeG62 »

regfman wrote: Sun May 15, 2022 4:07 pm
...Every few years we have to cancel credit cards. Sometimes it's because we think we've lost a wallet and sometimes it's a case of unauthorized use - fraud. When that happens we have to get new ones. It's a minor pain but I've made it a lot easier these days because I now keep a list of every account that is billing to a credit card so that they don't get shut off when a CC gets changed. So when I get a new card i have to log in to each account and make the changes manually. Currently my list is about ten accounts. I guess I could add the five or six utilities (assuming they don't have an extra charge to bill a credit card) where I am currently using ACH tranfers to my list.
You don't really need to keep a list of which vendors charge which cards. You have the prior months CC statements which contain that detail. :wink:

I charge everything that can be charged to a CC to one of my CC's. I will even do this where the utility charges a fee (for example PSEG charges me about $4 to process my payment charged to my CC), as long as the fee is less than the 2.625% I earn in cash back on my general purpose CC. My township charges a 2.95% convenience fee for using a CC to pay our RE taxes, so for them I make an online payment (debit to my checking account) when the bill is due. The only other vendors who charge my CC are my cell phone carrier ($20 discount for allowing them to do this) and the auto finance companies where we lease our vehicles (who won't accept a CC).

This doesn't really address the OP's concern about companies have my banking information and the risk that information somehow fell into the wrong hands. After all, every CC company I do business with has my banking information. The only way I address this risk is through alerts on my checking account. Every time something hits my checking account I get a text alert. Not sure I can (or need to) do more to protect myself.
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jello77
Posts: 6
Joined: Sun Jan 06, 2013 1:46 am

Re: Auto withdrawal from a checking account

Post by jello77 »

.
This thread has lots of useful information.

Here’s a summary of what I learned from this thread.

(1) Bank account numbers
Routing & account numbers of your bank account appear on your paper checks. This creates a security issue. Someone receiving a check from you could fraudulently use the numbers to initiate an ACH transfer from your account. Or they could buy paper checks using your numbers, then write checks against your account.

(2) ACH whitelist
To prevent fraud, banks allow business accounts to establish a “whitelist” of parties approved to make ACH withdrawals from the account.

(3) Consumer bank protection
Banks don’t allow consumer accounts to establish an ACH “whitelist.” But consumer accounts have certain protections that business accounts don’t have. If there’s an improper transaction, you can usually avoid liability by notifying the bank within 60 days. But if the bank believes you failed to use "ordinary care" to secure your account, you might not be protected.

(4) INSIDE and OUTSIDE cards
Whenever a credit card is taken outside your residence, there’s a potential to lose it. If you pay certain bills by auto-charging to a card, losing the card creates a problem. To avoid this, divide your cards into INSIDE cards and OUTSIDE cards. Use OUTSIDE cards only for in-person purchases at stores. Use INSIDE cards only for auto-charges and purchases made online at home. Keep INSIDE cards safely at home where they won’t get lost.

(5) Auto-paying bills
Recurring bills from a merchant can usually be auto-paid from bank account or credit card. Some merchants don’t allow auto-pay from a card. Some merchants charge an extra fee for auto-pay (flat dollar amount or percentage). If the auto-pay fee is less than the cash-back amount you earn from a card payment, paying by card may be preferred. For security reasons, some people prefer to avoid giving bank numbers to a merchant. In this case, paying by card may be preferred even with an extra fee.

(6) Card updater service
For consumers who pay bills by auto-charging to a card, Visa & Mastercard offer merchants an "account updater" service that a merchant might or might not subscribe to (see here: https://usa.visa.com/dam/VCOM/download/ ... chants.pdf). If your card’s account number or expiration date changes, the merchant might automatically update them. But you probably won’t know in advance if the merchant uses the update service. And the update service might be unreliable. So it’s best to notify the merchant directly as soon as possible.

(7) Bank accounts: push or pull
Bill payments from your bank account can be “pushed” to a merchant. Or payments can be “pulled” by setting up auto-pay with a merchant. Some people prefer to “push” because they feel it’s more secure and gives them more control. But if you become unable to handle your finances, using push to pay bills can create a problem if no one else knows how to push the payments. For this reason, many people prefer to automate bill payments as much as possible. When bill paying is fully automated, maintain it by: (a) keeping all account numbers & expirations dates updated, (b) monitor account alerts & statements, (c) maintain sufficient bank balance to pay all bills.

(8) Overdraft protection
Overdraft protection on a checking account can cause a problem. An erroneous or fraudulent check or ACH withdrawal could drain not only your checking account but also your linked savings account. For better security, some people keep a separate checking account with NO overdraft protection and with a limited balance which is used only for writing paper checks. This can also be helpful if you use a debit card to make in-person purchases. Link the debit card to a separate checking account with a limited balance and without overdraft protection. If the card is lost and used fraudulently, your finances won’t be seriously disrupted.

(9) Account alerts & statements
To protect bank & card accounts, you must become aware of problems as soon as possible. Set up account alerts to receive an email whenever a charge or withdrawal is made. Carefully check monthly statements. If you have numerous accounts, an aggregation service like MINT can be useful. It provides a listing in date order of transactions on all your accounts making it easier to spot problems.

.
KlangFool
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Re: Auto withdrawal from a checking account

Post by KlangFool »

jello77 wrote: Mon May 16, 2022 6:09 pm
(7) Bank accounts: push or pull
Bill payments from your bank account can be “pushed” to a merchant. Or payments can be “pulled” by setting up auto-pay with a merchant. Some people prefer to “push” because they feel it’s more secure and gives them more control. But if you become unable to handle your finances, using push to pay bills can create a problem if no one else knows how to push the payments. For this reason, many people prefer to automate bill payments as much as possible. When bill paying is fully automated, maintain it by: (a) keeping all account numbers & expirations dates updated, (b) monitor account alerts & statements, (c) maintain sufficient bank balance to pay all bills.
jello77,

Push payment is automated too. For some banks, they can automatically pull the bill from the biller and pay the exact amount. I choose not use that feature. I choose to overpay my variable bill a bit instead.

KlangFool
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CRC_Volunteer
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Re: Auto withdrawal from a checking account

Post by CRC_Volunteer »

Not all overdraft protection is tied to your savings account. My overdraft protection is a revolving line of credit. This was setup this way 30+ years ago.
"Let me explain. No, there is too much. Let me sum up." (Inigo Montoya) | | 65/30/05 | 53% VTSAX | 12% VTIAX | 30% VAIPX | 5% CASH
classicindexer
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Re: Auto withdrawal from a checking account

Post by classicindexer »

RetiredAL wrote: Sun May 15, 2022 10:02 am
student wrote: Sun May 15, 2022 7:53 am Why would you setup auto pay with your utility companies and insurance companies using checking account rather than credit card? Do they not accept credit cards? If you must use checking account, limit the amount of money you have in the checking account and disable overdraft protection from your savings account.
I am currently setting up a lot of our bills to a charge a credit card using a new second higher % cash-back card issued by our bank. I want our spending card separate from our bill-paying card for security reasons, thus the second card.

A major wrinkle I've run into head-on after I started this, is that many (most?) banks will no longer issue a joint owned card. So this new card is in my name only, and when I die it dies, stranding the auto-pays my DW would be expecting. Yes, she can be an authorized user, but that does not solve the die issue and an authorized cannot online view the transactions.

I enjoy having a one logon view of most of our banking stuff, but using a card with another bank that does allow joint ownership may be the final way I go. Of note, our long standing card from our bank is joint, but does not pay the higher cash-back.
The Fidelity Visa credit card offers joint owner that can be added after an account is established and it allows the joint owner to have online access. https://www.fidelity.com/cash-managemen ... ized-users
w5000
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Re: Auto withdrawal from a checking account

Post by w5000 »

jello77 wrote: Mon May 16, 2022 6:09 pm (7) Bank accounts: push or pull
Bill payments from your bank account can be “pushed” to a merchant. Or payments can be “pulled” by setting up auto-pay with a merchant. Some people prefer to “push” because they feel it’s more secure and gives them more control. ...
One potential problem with pushing that I've experienced (just once) is that for some recipients, the payment is done by cutting a physical check and putting it in the US mail, so there is a possibility that it can be lost in the mail. It's for that reason that I prefer to have bills paid via a pull by the biller, so if there's a problem then it's their problem, not mine. Bill pay services typically will cover a late fee if the payment isn't received in time, but it's your problem to deal with it.

Maybe most billers do get payments electronically these days, but I think there are still exceptions.
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