Automated Teller Machines or 24-hour Tellers are electronic terminals that let you bank almost any time. To withdraw cash, make deposits, or transfer funds between accounts, you generally insert an ATM card and enter your PIN. Some financial institutions and ATM owners charge a fee, particularly to consumers who don't have accounts with them or on transactions at remote locations. Generally, ATMs must tell you they charge a fee and its amount on or at the terminal screen before you complete the transaction. Check the rules of your institution and ATMs you use to find out when or whether a fee is charged.
 

Direct Deposit lets you authorize specific deposits, such as paychecks and Social Security checks, to your account on a regular basis. You also may pre-authorize direct withdrawals so that recurring bills, such as insurance premiums, mortgages, and utility bills, are paid automatically.
 

Pay-by-Phone Systems let you call your financial institution with instructions to pay certain bills or to transfer funds between accounts. You must have an agreement with the institution to make such transfers.
 

Personal Computer Banking lets you handle many banking transactions via your personal computer. For instance, you may use your computer to view your account balance, request transfers between accounts, and pay bills electronically.
 

Point-of-Sale Transfers let you pay for purchases with a debit card, which also may be your ATM card. The process is similar to using a credit card, with some important exceptions. While the process is fast and easy, a debit card purchase transfers money - fairly quickly - from your bank account to the store's account. So it's important that you have funds in your account to cover your purchase. This means you need to keep accurate records of the dates and amounts of your debit card purchases and ATM withdrawals in addition to any checks you write. Your liability for unauthorized use, and your rights for error resolution, may differ with a debit card.
 

Electronic Check Conversion converts a paper check into an electronic payment at the point of sale or elsewhere, such as when a company receives your check in the mail. In a store, when you give your check to a store cashier, the check is processed through an electronic system that captures your banking information and the amount of the check. Once the check is processed, you're asked to sign a receipt authorizing the merchant to present the check to your bank electronically and deposit the funds into the merchant's account. You get a receipt of the electronic transaction for your records. When your check has been processed and returned to you by the merchant, it should be voided or marked by the merchant so that it can't be used again. In the mail-in situation, you should still receive advance notice from a company that expects to process your check electronically.

A summary of your liability for unauthorized transfers.
 

The telephone number and address of the person to be notified if you think an unauthorized transfer has been or may be made, a statement of the institution's "business days" (which is, generally, the days the institution is open to the public for normal business), and the number of days you have to report suspected unauthorized transfers.
 

The type of transfers you can make, fees for transfers, and any limits on the frequency and dollar amount of transfers.
 

A summary of your right to receive documentation of transfers, to stop payment on a pre-authorized transfer, and the procedures to follow to stop payment.
 

A notice describing the procedures you must follow to report an error on a receipt for an EFT or your periodic statement, to request more information about a transfer listed on your statement, and how long you have to make your report.
 

A summary of the institution's liability to you if it fails to make or stop certain transactions.
 

Circumstances under which the institution will disclose information to third parties concerning your account.
 

A notice that you may be charged a fee by ATMs where you don't have an account.

If you report the loss within two business days after you realize your card is missing, you won't be responsible for more than $50 for unauthorized use.
 

If you fail to report the loss within two business days after you realize the card is missing, but do report its loss within 60 days after your statement is mailed to you, you could lose as much as $500 because of an unauthorized transfer.
 

If you fail to report an unauthorized transfer within 60 days after your statement is mailed to you, you risk unlimited loss. That means you could lose all the money in your account and the unused portion of your maximum line of credit established for overdrafts.

Take care of your ATM or debit card. Know where it is at all times; if you lose it, report it as soon as possible.
 

Choose a PIN for your ATM or debit card that's different from your address, telephone number, Social Security number, or birthdate. This will make it more difficult for a thief to use your card.
 

Keep and compare your receipts for all types of EFT transactions with your periodic statements. That way, you can find errors or unauthorized transfers and report them.
 

Make sure you know and trust a merchant before you share any bank account information or pre-authorize debits to your account. Be aware that some merchants use electronic processing of your check if you sign a receipt authorizing the transaction.

for more than the amount in your checking account, you overdraw your account. Your bank (or your savings and loan or credit union) has the choice to either pay the amount or not. If it pays even though you don’t have the money in your account, you may be charged an "overdraft" fee. If your bank returns your check without paying it, you may be charged a "bounced-check," or "nonsufficient funds," fee. And the person or company that you wrote the check to--for example, a store, your landlord, or the phone company--may charge you a "returned-check" fee in addition to the fee your bank charges you.

How can you avoid overdraft and bounced-check fees?

The best way to avoid overdraft and bounced-check fees is to manage your account so you don’t overdraw it.

Keep track of how much money you have in your checking account by keeping your account register up-to-date. Record all checks when you write them and other transactions when you make them. And don’t forget to subtract any fees.

Pay special attention to your electronic transactions. Record your ATM withdrawals and fees, debit card purchases, and online payments.

Don’t forget about automatic bill payments you may have set up for utilities, insurance, or loan payments.

Keep an eye on your account balance. Remember that some checks and automatic payments may not have cleared yet.

Review your account statements each month. Between statements, you can find out which payments have cleared and check your balance by calling your bank or by checking online or at an ATM. Be sure to find out the actual amount in your account--your account balance not including any funds available to you through "courtesy overdraft-protection," or "bounce coverage," plans.

Sometimes mistakes happen. If you do overdraw your account, deposit money into the account as soon as possible to cover the overdraft amount plus any fees and daily charges from your bank. Depositing money into your account can help you avoid additional overdrafts and fees.

What are "courtesy overdraft-protection," or "bounce coverage," plans?

Many banks (as well as savings and loans and credit unions) offer "courtesy overdraft-protection," or "bounce coverage," plans so that your checks do not bounce and your ATM and debit card transactions go through. With these plans, you’ll still pay an overdraft fee or a bounce coverage fee to the bank for each item. But you will avoid the merchant’s returned-check fee and will stay in good standing with the people you do business with.

How much do courtesy overdraft-protection, or bounce coverage, plans cost?

Plans vary, but most banks charge a flat fee (often $20 to $30) for each item they cover. And many set a dollar limit on the total amount your account may be overdrawn at any one time. For example, the bank might cover overdrafts up to a total of $300, including all the fees. In addition, some banks charge a daily fee--say $5 a day--for every day your account is overdrawn.

Example: Suppose you forgot that you had only $15 in your account and wrote a check for $25, used an ATM to get $40 cash, and used your debit card to buy $30 worth of groceries. In these 3 transactions you’ve spent a total of $95--and overdrawn your account by $80 ($95 - $15 = $80). How much will your forgetfulness cost you?

If you have a courtesy overdraft-protection plan, your bank may decide to cover all 3 transactions. And each of the 3 overdrafts will trigger a fee. You will owe your bank the $80 that you spent even though it wasn’t in your account, plus the 3 overdraft fees. If your overdraft fee is $25 per overdraft, you will owe your bank $155: $80 + $75 (3 x $25).

What are some other ways to cover overdrafts?

Banks, savings and loans, and credit unions may provide other ways of covering overdrafts that may be less expensive. Ask your bank about these options before making your choice. You may be able to:

Link your checking account to a savings account you have with the bank. If you overdraw your checking account, the bank can transfer funds from your savings account to your checking account. Ask your bank about transfer fees.

Set up an overdraft line of credit with the bank. You need to apply for a "line of credit" just as you would apply for a regular loan. If you overdraw your account, the bank will lend you the funds by using your line of credit to cover the overdraft. You will pay interest on this loan, and there may be an annual fee. But the overall costs may be less than the costs for courtesy overdraft-protection plans.

Link your account to a credit card you have with the bank. If you link your account to a credit card, any overdraft amount becomes a cash advance on your credit card. You will probably be charged a cash-advance fee, and interest charges on the advance will start immediately. The cost of this option depends on the interest rate on your credit card and how long you take to pay back the advance.

The choice is yours. Consider these ways to cover your overdrafts:

* These costs are only examples. Ask your bank, savings and loan, or credit union about its fees. Return to table

What do you need to know about courtesy overdraft-protection, or bounce coverage, plans?

Avoid using these plans as short-term loans--they are costly forms of credit.

If you overdraw your account, get money back into your account as soon as possible. Remember that you need to put enough money back into your account to cover both the amount of your overdraft and any bank fees.

Even if you have one of these plans, there is no guarantee that your bank will cover your checks, ATM withdrawals, and debit card and other electronic transactions that overdraw your account.

Good account management is the lowest-cost way to protect your hard-earned money. If you need overdraft protection every now and then, ask your bank about the choices and services that are right for you.

What should you do if you have a problem or complaint about courtesy overdraft-protection, or bounce coverage, plans?

If you have a complaint, first try to resolve the problem directly with your bank, savings and loan, or credit union. If you are unable to resolve the problem, you may want to file a complaint with one of the state or federal agencies responsible for enforcing consumer banking laws.

For more information, contact the federal agency responsible for regulating your financial institution.

Because of Check 21 and other check-system improvements, your checks may be processed faster--which means money may be deducted from your checking account faster. Before you write a check, make sure that your checking account has enough money in it to cover the check.

You may be one of the majority of consumers who do not receive their canceled checks with their account statements. Instead, you may receive "pictures" (known as digital images) of your checks, a list of your paid checks, or a combination of these items. Check 21 will have little or no effect on these practices.

On the other hand, if you do get your canceled checks back in your regular account statements, you may notice some changes under Check 21. For example, your bank may start sending you a combination of original checks and substitute checks in your account statements. You may use a canceled substitute check as proof of payment just as you would use a canceled original check.

The account agreement you have with your bank governs whether you receive canceled checks with your account statements. If you currently get canceled checks back with your statements, you will continue to receive your checks unless your bank notifies you that it is changing your account agreement.

You may receive substitute checks in other limited circumstances. For example, your bank may give you a substitute check if you ask to have a particular canceled check back to prove a payment. Also, your bank might provide a substitute check to you when returning a "bounced" check that you deposited into your account.

By law, your bank may not pay a check from your account unless you authorized that payment. In other words, you are protected from having your bank pay the same check from your account more than once or from having your bank pay the wrong amount for a check. Check 21 does not change these protections. However, Check 21 does give you special rights if you receive a substitute check from your bank. This guide explains your rights regarding substitute checks. For your rights in other situations, contact your bank.

A substitute check is a special paper copy of the front and back of an original check. The substitute check may be slightly larger than the original check. Substitute checks are specially formatted so they can be processed as if they were original checks. The front of a substitute check should state: "This is a legal copy of your check. You can use it the same way you would use the original check." The following sample shows what a substitute check looks like.

Not all copies of a check are substitute checks. For example, pictures of multiple checks printed on a page (also known as an image statement) that is returned to you with your monthly statement are not substitute checks. Online check images and photocopies of original checks are not substitute checks either. You can use image statements and other copies of checks to verify that your bank has paid a check.

Some banks find that exchanging electronic images of checks with other banks is faster and more efficient than physically transporting paper checks. In certain circumstances, however, banks may need to use a paper check. To address this need, Check 21 allows a bank to create and send a substitute check that is made from an electronic image of the original check.

No. In general, the law does not require your bank to return your original check. Many banks destroy original paper checks. Other banks may store original checks for some period of time and then destroy them. Check 21 ensures that you have the same legal protections when you receive a substitute check from your bank as you do when you receive an original check.

Check 21 provides a special process that allows you to claim a refund (also known as an expedited recredit) when you receive a substitute check from a bank and you think there is an error because of the substitute check. For example, you may think that you were charged twice for the same check.

You may use the special process to get a refund of the money you lost. The amount of your refund under the special process is limited to the amount of your loss or the amount of the substitute check that you received, whichever is less, plus interest on that amount if your account earns interest. If your loss is more than the amount of the substitute check, you may have the right under other laws to recover additional amounts of money.

If your bank finds that your claim is valid, you should receive your refund by the next business day after the bank's finding. Unless your bank finds that your claim is not valid, you should receive up to $2,500 of your refund (plus interest if your account earns interest) within 10 business days after your bank receives your claim. You should receive the rest of your refund (plus interest if your account earns interest) no later than 45 days after your bank receives your claim. If your bank finds that your claim is not valid, it will send you a notice explaining why.

Your bank may reverse the refund (including any interest on the refund) if it can show that the substitute check did not cause an error in your account.

If you notice a problem with a substitute check, you should contact your bank as soon as possible. In general, to use the special refund procedure for substitute checks, you should contact your bank no later than 40 days from the date your bank provided the substitute check or from the date of the statement that shows the problem.

In general, you must

Contact your bank.

Visit the online information on Check 21.

Contact your state's consumer protection agency or attorney general's office for information on state laws that apply to checks and substitute checks.

When Is Your Check Not a Check

What You Should Know about Your Checks