Like most people, I rely on the wonders of banking technology to receive my paychecks and pay my bills. Banks offer the almost magical feature of money showing up in your bank account (ie direct deposit) or having bills paid on a schedule while you worry about other things.
Modern technology is often so fluid and convenient that it is easy to forget that both computers and the people who use them are not perfect. It would be nice to think that our banking system is fail-safe. However, that would be ignorant, and in the case of finances, ignorance is far from a blessing.
Here are four real-life examples of banking disasters that could have happened to anyone, even you.
1. Direct Deposit Failure
One day I received an email from my company’s accounting department saying the following:
“We have learned that funds were not deposited into employee accounts on time due to a change in our company’s payroll processing process. This may have inconvenienced everyone. My apologies for this.
My heart immediately started racing. What about my mortgage payment? What about my bills? Am I returning checks all over town?
My employer is a reliable and stable small business. They use a huge and well-known company for their payroll processing, but clearly these kinds of mistakes can and do happen. Fortunately, I was able to move some funds to cover the deficit before it was too late, avoiding a new crisis.
Lesson to learn here:
Anytime you grant access to an institution to deposit or withdraw funds directly to your bank account, you need to make sure you have a backup plan (i.e. an emergency fund). These systems are far from infallible.
As a result of this experience, I am never completely confident that my direct deposit will occur on schedule. I always have some liquid funds available that I can access in case of need.
2. Bill payment increases
suppose you rely on an electronic bill payment system from your bank to pay mortgage. Since your payment is due on the 30th and your bank is open seven days a week, you feel secure in the belief that your mortgage payment would always be withdrawn from your account on the 30th.
However, bank had other ideas. Their computers apparently weren’t planning to report to work last Sunday, which turned out to be the 30th. Imagine someone’s surprise when they received an email notifying him that his mortgage payment had been withdrawn from the account on Friday the 28th. Because Hoping to make a deposit on the 29th to cover his mortgage payment, he was forced to go on a mad race to find funds to deposit before Friday’s close to cover all his expenses.
Lesson to learn here:
Banks have their own way of calculating payment dates when setting up automatic payments. They will generally withdraw the funds on the last business day before the payment is due. In this case, the payment was scheduled for a day when the bank was closed. The next time it could happen on a bank holiday like Presidents’ Day or Columbus Day.
Since this changes from month to month, you need to be very careful to log into your account regularly and know when each scheduled payment will be withdrawn.
3. Transaction error
Jessica stopped by for a quick lunch at Wendy’s one day. She uses her debit card to pay for her food. When the cashier swiped her debit card through the machine, she did not press the decimal key when entering the total. The result was an immediate debit of $ 700 from his bank account. The cashier noticed the problem and appeared to void and rerun the transaction.
As you may have guessed, that didn’t work out according to plan either. Only later did Jessica realize that both the original charge and the second charge were debited from her account. With his bank account now overdrawn, he began the long and grueling process of requesting that his bank conduct an investigation. Unlike a credit card chargeback, reversing a failed debit transaction can take more than a week.
Lesson to learn here:
Although you can’t borrow money with debit cards, they should be used with extreme caution. Correct or incorrect debit card transactions will immediately remove the funds from your bank account. Getting your money back is a difficult and time-consuming process. Pay close attention to your transactions. If an error occurs, have a manager verify that the transaction was successfully voided and obtain a receipt for the void and the original charge.
If you suspect that you have been accidentally overcharged or are the victim of card theft fraud, you should immediately contact your bank. Remember that you may not be reimbursed for several days.
4. Banking error in your favor
Sometimes technology is not at the root of a banking disaster. For example, James wrote a check to his lawn care company for $ 70.00. Like many of us, his handwriting is not the best. The bank did not notice the decimal point when they cashed your check and $ 7,000 disappeared from your account.
While it was easy enough to figure out what had gone wrong, the banks did not seem in much of a rush to fix the problem. His bank had to contact the other bank and initiate an investigation. Eventually everyone realized the source of the error and the difference was restored to James’ account, but only after several agonizing days had passed.
Lesson to learn here:
since James told me this story, it has crossed my mind every time I write a check. Now I write each check slowly and carefully. If you ever see a check that I have written, you will notice that each decimal point looks more like the bubble on a standardized test than a missing mark.
Conclusions
Our modern banking system is a wonderful thing that works with almost 100% accuracy. However, it may fall short due to technical and human errors. Ultimately, the only person fully responsible for your money is you. By being aware of how the system can fail, you can take steps to minimize the possibility of a problem and its impact on your life.
