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Christian
Topic: Automated Banking
October 30, 2004 - by Crown Financial Ministries
It is not unbiblical nor unethical to take advantage
of the time and energy savings available through
the use of automated banking.
It is almost impossible for a Christian living in
this modern world to avoid completely all aspects
of automated banking.
It is not biblically wrong or unethical to take
advantage of the time and energy savings available
through the use of automated banking; it is the
misuse of automation that should be of concern.
In addition to checking, savings, and CD accounts,
loans (both personal and business), and investments,
some banks now offer a variety of automated services.
Although these services are convenient, if discipline
is not practiced in their use, they can lead to
major budget and personal finance problems.
These automated services are offered by most banks,
especially banks with nationwide offices: checking
and savings accounts, telephone and online banking,
Automated Teller Machine (ATM) cards, VISA and MasterCard
check cards, direct deposit, payroll deduction,
bill payer service, automatic debit, equity lines
of credit, personal lines of credit, credit cards
(both secured and unsecured), and overdraft protection.
Checking and savings accounts
A checking account is a good way to keep
track of expenses, but it is not for everyone. Some
people have a difficult time understanding and balancing
a checking account; others just prefer cash.
Most checking accounts have a monthly fee, which
is automatically deducted from the checking account.
Some accounts don’t charge a monthly fee if
a certain balance is maintained in the account.
In addition to monthly fees, there also will be
a charge for check and draft printing.
Other fees might include making more deposits or
withdrawals than the bank allows each month or using
an Automated Teller Machine (ATM) card. Be sure
that all fees and charges are understood, including
fees for returned checks, before finalizing a checking
account agreement.
Telephone and online banking
Telephone and online banking allows customers
to access detailed information on all of their accounts
and loans. With this type of banking, customers
can do anything from finding checking account balances
to making loan and credit card payments by transferring
funds from one account to another.
However, if customers do not write down their telephone
or online transactions in their checkbook register
or in their income/outgo financial records, telephone
and online banking could become disastrous.
ATM cards
Many people use ATM cards to make purchases
or to withdraw cash. These cards also are called
debit cards, because each withdrawal or charge is
automatically deducted from checking or savings
accounts.
These cards are very convenient, but there are some
cautions that need to be considered when using them.
(1) Don’t rely on the balance from the ATM
machine. The machine balance does not take into
consideration any checks that have not cleared your
bank. (2) Write down every ATM transaction in the
checkbook register and save every receipt to verify
the withdrawal. (3) Don’t use any part of
a Social Security number as a PIN number. (4) Report
lost or stolen cards immediately.
VISA and MasterCard check cards
Like ATM cards, Visa and MasterCard check
cards are not credit cards; they are debit cards
that are accepted as credit cards. Purchases are
immediately deducted from checking accounts. Make
sure that all check card transactions are written
down in the checkbook register.
Direct deposit
Direct deposit means that employees’
incomes are deposited directly into their bank accounts.
This method of funding accounts is convenient, but
it does have its drawbacks.
With direct deposit, there is no option to get cash
back and often banks make mistakes and credit the
wrong account. So, make sure the bank sends a deposit
receipt after each direct deposit so that the receipt
can be compared to the monthly account statement
issued by the bank.
In some cases, such as garnishment or the payment
of back child support, the courts will not allow
direct deposit. But in other cases, such as Social
Security entitlements, direct deposit is typical.
Payroll deduction
Payroll deduction is a method in which
an employer deducts specific amounts from employees’
paychecks to pay for specific contributions, taxes,
or benefits.
These could include deductions for Social Security
and Medicare, federal and state income tax, city
tax, union fees, hospitalization, life insurance,
retirement, cafeteria plan, disability insurance,
or any number of programs provided by an employer.
Because employees never see the money, they never
miss it.
Yet, although payroll deduction is a convenient
way to pay for obligations and services, an employee
still needs to confirm amounts that are being deducted
and the purpose for the deductions.
Bill payer service
This service is also an automatic deduction
program. Customers can choose to have the amount
of their utilities, car payments, insurance premiums,
mortgage payments, and any number of other bills
automatically deducted from their checking accounts
each month.
But there are some cautions that must be considered
regarding this service. Always record in the checkbook
register all automatic deduction transactions and
the date of the transaction. Always compare the
monthly statement with the checkbook register to
confirm withdrawals.
Automatic debit
With automatic debit, customers give permission
for their checking or savings accounts to be debited
for specific amounts.
Typically this is a one-time debit, but since bank
account numbers have to be given over the phone
or online, occasionally checking account debit scams
can debit accounts numerous times without the knowledge
of the account holder. To avoid any type of over-debiting
on checking accounts, do not give checking account
numbers to any telemarketer or in response to a
mail solicitation.
Equity and personal lines of credit
An equity line of credit is credit guaranteed
by a customer’s home equity. A personal line
of credit is credit guaranteed by personal property,
such as a savings account or a paid-off car. Customers
can borrow against the line of credit simply by
writing a check.
Using lines of credit is usually an unwise choice,
because it encourages debt when there should be
spending discipline and gives a false sense of financial
security. In addition, funds borrowed against lines
of credit have to be paid back, usually through
an automatic checking account deduction, with a
high interest rate.
Credit cards (secured and unsecured)
Most banks can issue either VISA or MasterCard
credit cards, or both, to their customers who qualify
for credit. Like money, credit cards are not bad;
problems come when they are not used correctly.
The only time a credit card is of any real benefit
is when purchases are restricted to a planned budget
only and the balance is paid in full each month.
A secured credit card is one that is collateralized
by a certain amount of cash that is placed in the
bank that issues the card. Most banks require that
at least 100 percent of the credit limit (some require
as much as 150 percent but others require only 50
percent) be maintained in a savings or checking
account in order for the credit card to be active.
Secured credit cards usually have an annual fee,
but they have lower rates of interest than nonsecured
cards.
Nonsecured credit cards are cards based on a customer’s
credit history and his or her presumed ability to
pay the bill. Many times, if the regular monthly
payment is missed, the bank will debit the cardholder’s
checking or savings account to cover the monthly
payment.
Both a secured and a nonsecured credit card can
be used to withdraw cash from an ATM. However, when
a credit card is used to withdraw cash, the bank
normally charges an immediate service charge, plus
interest from the day the money is withdrawn.
Overdraft protection
Generally banks offer two types of overdraft
protection. One type involves an automatic loan
in which interest is charged from the day the loan
is made until it is paid off.
The other type involves transferring money from
a person’s savings account to cover the check
short fall. No interest is charged with this type
of automatic overdraft protection.
The fist type of automatic overdraft protection
is one of the worst services in banking and is certainly
one of the quickest sources of debt for undisciplined
people who don’t balance their checkbooks.
In addition, it encourages them to use credit when
they should really be disciplining themselves.
“The plans of the diligent lead surely to
advantage, but everyone who is hasty comes surely
to poverty” (Proverbs 21:5).
Conclusion
Although most banks provide a vast array of convenient
services and programs, people must pay close attention
to the stipulations of each service offered and
how it will affect family budgets and finances.
© Copyright 2004, Crown
Financial Ministries. All rights reserved.
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