Automatic transfers can help make your life easier. They can save you time, build savings slowly, or even pay bills so you do not incur a late fee. However, if you are not careful, you can potentially find yourself being charged bank fees!
Here are some examples that could lead to over drafting on your bank with automatic transfers:
- Irregular income
- Delayed pay due to a holiday
- This seems to happen where I work. If a holiday falls on a Monday, we would not see the money in our account until Friday. We normally get paid on Thursdays.
Personally, the only automatic transfer I have is right from my paycheck to the 403b. The only other automatic transfer I would consider is putting money away into savings directly from my paycheck. This is before I have the chance to spend it! I would never have an automatic transfer pull from my checking account on a certain day. I know too many people that have been hit with bank fees from their bank due to automatic transfers.
I perform all my transfers and pay bills manually once I know my check cleared and the funds are available to me. It takes me about 10 minutes or less every pay period. This method has probably saved me from countless bank fees over the years.
If you are considering automatic transfers to pay bills or save, be sure you will have enough money on your account when the time comes. Otherwise you may see some nice bank fees on your next statement.
Have you ever been hit with bank fees due to automatic transfers?