TIPS to the Rescue!

U.S. BANK CHECKING ACCOUNT ADVANCE

If eligible, you may borrow between $20 and your available credit limit. If your checking account is overdrawn, you must borrow enough to bring your checking account balance to a least a $0 balance.

The finance charge is $2 for every $20 borrowed. This is an Annual Percentage Rate (APR) of 120%.

Wow!

It all started with a mistake I made this week. My property tax bill is coming up and although I had plenty in my checking account to cover it, I opted to transfer a bit more money over from an online account at another bank as an extra buffer. Call me paranoid but I don't like running with low balances. All it takes is one excess banking fee to turn free checking into something quite expensive.

Being one of those careful double-checking types, I called my bank's automated system today to see how much money I had available before cutting the property tax check. It was FAR less than I knew it should be. It took me all of 5 seconds to figure out what I had done.

I mistakenly transferred the money the wrong way! Rather than put additional money in to serve as a buffer, I actually yanked out my previous buffer and a whole lot more. D'oh!

This brought me to the next startling fright. It is the Halloween season and more tricks were clearly on the way. My balance should be negative. If not now, it soon will be.

I then called customer service and asked what my options were. I've never actually had a check bounce and figured there might still be time to head it off.

He offered me $500 at a 120% annual interest rate. Gee, thanks! With friends like that, who needs enemies? Another option he offered was to do nothing and let the fees pile up as checks began to bounce (he worded it in a much friendlier way). I ended that conversation and decided to dig further on why my account actually was not negative already. Maybe I could hit the problem from the other end.

That's where TIPS came in. Thank you US Government. You deposited interest in my checking account on October 15th (one day after the period my last bank statement covered). Saved by a timing miracle!

I'm not completely out of the woods yet, but at least I have more control over where this goes. At least I won't be bouncing checks. Whew!

I immediately transferred more money from my online account to my brick and mortar bank. Time is not on my side though. The property tax check must be postmarked by October 31st. I'm hoping that I can see the money show up in my US Bank account by Saturday AND get confirmation from my bank that they won't put a hold on the funds. I'm fairly confident I can get the latter if I arrive in person and explain it. I've had some practice at it over the years (mostly when moving money to buy I-Bonds). Persistence and a good credit record goes a long way.

I may need to pay my property taxes late though, depending on how it goes. I'm certainly not guaranteed success. Regardless, it is far better than bouncing checks and/or paying 120% interest rates though. Paying a month late should cost me just over $30. I'm hoping it doesn't come to that, but at least I miraculously managed to fend off at least some of the pain (blind luck).

And lastly, I want to point you to something my bank statement used to say on it (but says no longer).

Summary of Your U.S. Bank Relationship

What happened to our relationship? Was it something I said? Why are you offering me 120% interest rate loans? You seem so cold and distant these days.



I am once again reminded of the economic pain that millions of people go through each and every month in this country. I had money but simply had it in the wrong place. There are many who simply don't have the money at all. The banking system is there for them, much like the loan sharks of the past.

As Cobleigh explains, "The real aim of loan sharks is to keep their customers eternally in debt so that interest (for the sharks) becomes almost an annuity."