savings

Follow bank's rules to avoid overdrafts

Dear Dr. Don,
I bank at Wells Fargo and have my Social Security income, or SSI, disability check deposited there by automatic deposit each month. The issue that I have is they bounce several checks each month on me when the deposit is there. They show it pending for up to two full days while they post everything as fast as they can, even if the charge was made after my SSI check was deposited. What can I do?
-- Marty Morass

Dear Marty,
You've got to learn to play by the bank's rules. Direct deposit of your SSI disability check gets the money into your account safely and conveniently. The bank showing the deposit as pending means the funds weren't available for your use.

Here's what the Social Security Administration's Web site says about the direct deposit program in a frequently asked questions page:

How do I know when my money is in my account so I can pay my bills?
Your money is deposited on the day you're scheduled to receive your benefit. For example, if you usually receive your benefit on the third of the month, your money is available to you at the opening of the business day on the third. You can check with your bank to be sure that your money has been deposited.

When can I use my money?
Your money is available for use as soon as it is deposited into your account. You can write checks, pay bills, withdraw money or put some into savings. Anything you usually do with your money now, you can also do with direct deposit.

Talk to your bank about when the funds are available. If they're showing the funds pending on the first and available on the third, and the third of the month is when you are scheduled to receive your benefit, the bank's doing nothing wrong.

However, you are doing something wrong -- by writing checks against money that's not in your account.

Overdrafts are a big deal. Your bank can terminate your bank account because of overdrafts. The overdrafts also may be reported on your consumer banking report. Trying to find a new bank to open an account when you have a bad consumer banking report can be a real hassle.

Bankrate's checking basics feature on ChexSystems explains this report in greater detail.

Check overdraft protection may be the answer if you find that you can't get your payments to come after your receipts. The Federal Reserve electronic pamphlet, " Protecting Yourself from Overdraft and Bounced-Check Fees," provides some additional tips on avoiding overdrafts.

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