Archive for Banking


There is a little known fact about on-line banking that created a recent client serious problems, and after some research, I discovered could someday hurt me.

For a long time I have wondered exactly what the “payment date” means in relationship to my on-line banking account. Is that the day that the bank sends a check or electronic debit to my creditor, or is that the day the creditor will make a withdrawal from my account? What difference does it make, you may say? In my circumstances here is the explanation:

My mortgage is due on the first of each month. I set up my on-line banking account so that the payment is made on the first of each month. That works great because I have a pay check that is deposited on the last day of each month.

My bank is so efficient that they tell me by email when they make an automatic payment from my account. Recently that mortgage payment was sent to my mortgage company on the 27th! Banks only allow payment to and from each other by paper check, so in order for my mortgage to be paid on the 1st, the mortgage bank has to have the check printed by my bank, and mailed before then.

I was concerned that toward the end of the month before my paycheck arrives, that my account might be running a little low, so I called my bank. Surely the check sent to the mortgage company would be dated the 1st – the day I authorized the bank to pay the bill — but I was wrong, it was dated the 27th!

So what this means is that if the mortgage bank gets the check the day after it is mailed, and they cash it, the amount will be taken from my account before my paycheck arrives, and I could overdraw my account, and be assessed an overdraft fee.

It might be a good idea to ask your bank exactly when an on-line banking disbursement is paid.

THE LESSON TO BE LEARNED – When you use online banking, and set up bill payments, be aware that payments may be paid a few days before your request, so make sure you have enough money in your account at all times to cover any on-line payments you have authorized.

LESSON TWO – Just because your bank informs you that a check has been sent to pay a bill, doesn’t mean that the debt is paid. It may only mean that the check has been mailed and depending on the creditor, it could be days or weeks before the check is cashed. This lesson is particularly important if you close a bank account, or withdraw authorization for a creditor to take payments from your account. If you close the account, or withdraw the authorization, it is of no importance that a check has been sent by your bank to the creditor. That check cannot be cashed if you have closed your account. So before closing an account, confirm that all checks and on-line payments issued have cleared your account.



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