Use Automatic Alerts to Avoid Late Fee and Returned Check Fee

a bell and a sunsetFrom the first day I had my own bank account, I have always maintained an adequate level of fund in my checking account to cover everyday expenses. Since when money goes out of and comes into the account is very predictable, I don’t have to keep a lot of my money in the checking account that earns me nothing, but still have all the bills paid on time. However, there was a close call this summer when my checking account balance dropped below zero due to an error made when I was setting up an Ally Bank CD account.

Before things were cleared, I was very nervous as I also had a few other transfers scheduled around that time. Had the withdrawal gone through, I would have paid a lot of fees due to insufficient fund in my account. I also feel quite lucky that I checked my account that morning and did what had to be done. Fortunately, nothing really happened at the end because the stop order I placed on the withdrawal at BofA eventually worked and it stopped the transfer.

When the whole incident was over, I realized that I need a better way to notify myself for situations like this when the account balance drops to dangerous level. Because I never had any such incident before, I didn’t have such alert in place. Instead, I had relied entirely on my manual check of the account for years and that’s not really very reliable. What I did back in July was to set up several automatic alerts in my account that will send me an email when certain events happen, such as

  • Available balance
  • Account has insufficient funds
  • Low balance threshold

The first alert emails me the account balance every morning so I know how much I have in the account without even logging in. The last two occur only when the account doesn’t have enough money. The second alert goes off when the balance is below zero. However, I don’t want to be informed only when there’s no money in the account. If that indeed happens, it is probably already too late. So I created the third alert with a balance threshold at $1,500, a level that requires me to replenish the account immediately.

While that was the first time that I set up bank alerts, I have been using credit card alerts for a long time. Alerts that help me manage my credit card bills include:

  • Statement available
  • Transaction exceeds a threshold
  • Account balance exceeds a threshold
  • Payment scheduled
  • Payment reminder
  • Payment not received
  • Payment posted

Because I no longer receive any paper statement from credit card issuers, I rely on email alert to let me know when the monthly statement is available online for me to review. The second and third alerts are for situations when either a large purchase is posted in the account or the total account balance exceeds a threshold. Once receiving these alerts, I usually check the account right away to see if there’s anything unusual. The last four alerts are all related to credit card payment. To make managing my credit accounts easier, I have arranged to have all payment deadlines at about the same time, in the first week of the money, so I can schedule payments on the same day for all cards. Some card issuers, such as Chase, alerts me when a payment is scheduled, others like AmEX remind me when no payment is received xyz days before the due date. In addition to using these alerts, I also check my bank account to make sure that payments are indeed taken from the account when they are supposed to.

With these alerts, I have never missed a single credit card payment and never paid a late fee.

Photo credit: apple 94

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5 Responses to “Use Automatic Alerts to Avoid Late Fee and Returned Check Fee”

  1. Kelli |  Nov 21, 2009 at 1:00 pm

    We are going through this right now. Our bank sent in a 3300 dollar credit card payment twice! We were overdrawn by 1200 for about 6 days over the 15th of the month when about 10 other bills come out automatically. We have had about 700 dollars in late fees, returned checks and overdrafts….luckly it is down to about 75 after days and hours of talking on the phone. It is so upsetting that a mistake that was not even ours is ending up costing us so much time and still some money….. We have never had this situation before and I can see how people can go into debt so easily with fees

  2. SavingEverything |  Nov 22, 2009 at 5:26 pm

    Was this from 1 of the large banks (BankofAmerica, Chase, Citibank, CapitalOne, HSBC, Sovereign/Banco Santander, or Wachovia/ WellsFargo)? I also had similar experience; but, these alert systems still will not prevent errors where either your bank account or the payee makes a double payment mistake.