Technology

Digital Age Cutting Down On Check Float Time

BOSTON (WBZ) ― It's a common financial gamble. You pay a bill, hoping your paycheck clears in time to cover it. But in the digital age that kind of personal book-keeping can have disastrous results.

Keisha Scott knows what it feels like to walk a financial tight-rope. "My financial situation is a little bleak at this moment," she said. Several of Keisha's bills arrive at the same time of the month, when cash is tight. She recently had to decide between paying her car loan or her cell phone bill. "If I don't pay the car note, they can come and pick up my car the very next day," she said. "So, I had to go without service for my phone."
 
Sending a traditional check used to buy you a few days. The creditor had to deposit into their account and then wait for it to clear yours. But personal finance columnist Liz Pullam Weston says that just doesn't fly anymore. "Now banks are allowed to make a digital electronic image of your check and they can cash that rather than a physical piece of paper," she explained. That means there's really no more "float" time.

Pulliam Weston says there are still ways to buy some time to avoid overdraft fees. Her first piece of advice: sign up for direct deposit. "It's electronic, it's safe and it's fast and usually you can get access to the money almost immediately.

Next, she says, call your creditors and customize the due dates for your bills. "If you have a credit card, for example, that comes due at the end of the month when you don't have a lot of money, switch it to the beginning of the month after you get your paycheck," she explained.

Credit card issuers, retailers and utilities are generally flexible. Pulliam says another great tool for managing your money: online banking. "You can typically set up email alerts for when your balance drops below a certain amount," she said.

You can also schedule automatic bill payments. "It's an entirely electronic transaction, so you can see exactly when the money leaves your account and you can trace it right to the account that you are paying," she said.

Keisha hopes some of these tips will help make the tough times a little easier on her wallet.

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