Being a Smart Banking Consumer: Opening a Checking Account (continued)
/Banks are a place for us to handle our checking, savings, and possibly a loan. Beyond that, for many of us banking is a black hole. Why banks do what they do and how they do it is little understood outside of the banking community.
The more information you have, the better consumer you can be.
Being a Smart Banking Consumer
(Part 12) Opening a Checking Account (Continued)
Opening a Checking Account: What You Need
As we discussed in the first post in this series, in order to open a checking account at a bank, it’s best if you have not had a checking account forced closed in the past as the result of bouncing checks at another bank. All banks are members of a checking account tracking company. Banks will report forced closed accounts to these companies, and that information is available to all members.
As a new customer, when you walk into the bank to open a checking account, your history with other banks will be checked. Some banks will allow you to open an account even if you have had trouble with a previous bank, but these are few. Again, the moral of the story here is to treat your account and your bank in a nice way.
You will need to have a current driver’s license or official picture ID for identification. Some banks will allow you to open an account with zero money. Others want a minimum deposit. The bank will also check your name against an official possible terrorist list. You will be asked a series of questions to determine if you are a risk for money laundering.
The Documents: What You Will Receive and What They Mean For You
Here, we continue with the disclosures you will receive opening a new account:
Electronic Funds Transfer Act (EFTA) Form
One of the more important disclosures is the Electronic Funds Transfer Act (EFTA) Form. It is intended to protect individual consumers engaging in services that involve electronic fund transfers (EFTs) and remittance transfers. The services included in the EFTA form are:
Transfers through automated teller machines (ATMs). For example, transferring money from a checking account to a savings account using an ATM.
Point-of-sale (POS) terminals. Typically, retail store credit card machines.
Automated clearinghouse (ACH) systems. ACH systems allow for the transfer of funds electronically from the consumer to a company (or vice versa) and between companies. A common ACH transaction is the payment of payroll into your checking account from your employer.
Telephone bill payment plans in which periodic or recurring transfers are contemplated.
Remote banking programs, also known as online banking.
Remittance transfers. Remittances are funds sent to a family in a foreign country from the U.S. These transfers are normally from one family member to another. As an example, $36 billion in remittance transfers was sent from the U.S. to Mexico in 2019—all of it sent to families in Mexico.
Electronic Funds Transfer
The EFT deals with several subjects. Some of the key ones are:
Accepted Devices— An accepted access device is an access device that a consumer requests and receives, signs, or uses (or authorizes another to use) to transfer money between accounts or to obtain money, property, or services. Examples include smartphones, your computer, your home telephone, and ATM machines.
Electronic Checks/ECK Transactions— In an ECK transaction, a consumer provides a check to a company. Information from the check is used to initiate a one-time electronic check from the consumer’s account. The company receiving the check must obtain the consumer’s authorization for each ECK transaction.
Consumer Liability— The financial institution must include a summary of the consumer’s liability for unauthorized transfers.
Consumer Information on Where to Report a Problem— A financial institution must provide a specific telephone number and address for reporting a lost or stolen access device or a possible unauthorized transfer. This information is found on, or with the disclosure statement.
Error Resolution— Errors on checking, savings, and credit card transactions have certain timeframes for reporting and liability limits. A bank has the following timeframes on which to investigate:
Ten-day Period: A financial institution must investigate and must determine whether an error occurred within 10 business days of receiving a notice of an error. The bank must report the results to the consumer within three business days after completing its investigation. The Bank must correct the error within one business day after determining that an error occurred.
Forty-five-day period: If the bank is unable to complete its investigation within 10 business days, the bank may take up to 45 days from receipt of a notice of the error to investigate and determine whether an error occurred, provided the institution gives the consumer provisional credit. Provisional credit is a credit to your account for the amount of error that you reported, based on the resolution of the investigation by the bank. If the investigation finds that there was an error, then the provisional credit becomes permanent, and the investigation is concluded.
Overdraft Protection
An overdraft occurs when you write a check, but there are insufficient funds in the account to pay the check. Overdraft protection allows for payment of the transaction that creates an overdraft. This payment of the check that created the overdraft allows you, the consumer, to keep your credit in good standing with the company to whom you owe the payment.
As a consumer, you can opt-in for overdraft protection, or you can opt-out. If utilized, the bank will charge you an overdraft fee for the overdraft. Protection programs can vary on the amount of protection, covering overdraws ranging from a few hundred dollars into the thousands.
This concludes our review of opening a checking account and the key documents you will receive.
Stay tuned for more posts about financial wellness from Common “Cents”.
©Whatismyhealth
Special thanks to our resource:
https://fedpaymentsimprovement.org/news/blog/remittance-payments-3-cross-border-corridors-to-know/
A checklist of common documents related to deductions and credits that you will need when preparing to file your taxes for last year.