It’s Drafty in Our Debit Account

A few years ago (at least 5) I set up four accounts at my credit union. One account is my main checking account, one is a debit card account and two of the accounts are savings accounts. One savings account is tied to our main checking account and one is tied to our debit account. You may be wondering why we have separate checking and debit accounts when most people just have one account for both. The reason we do this is because I’ve read one too many articles about people’s debit card number getting stolen and their account being emptied. Once their account was emptied they spent a chunk of time working with the bank to get the funds restored and dealt with bounced checks and all the fees that go along with them.

We try to keep $500 in our debit account at all times and the savings account that backs it up only has about $1000 in it. The majority of our money is kept in our main checking and savings accounts. By doing this, we feel safer against potential debit card number theft and never have too much money at risk. We also don’t have any other transactions happening in our debit account so even if the balance is stolen from the account, we won’t have to deal with bounced checks etc.

The one risk to this strategy is that you really need to keep an eye on the account balance in the debit account. This hasn’t been a problem since we created these accounts but we finally got caught with our pants down this weekend when my wife used the debit card for a large shopping trip. The account balance had gotten down to $270 or so and my wife had one transaction for $298. OVERDRAWN. Luckily my credit union doesn’t charge any sort of fee to transfer money from our savings account to cover the discrepancy.

There were a couple reasons that this happened. First of all, I hadn’t checked the account balance in a few days and didn’t notice that we were down to $270 in the debit account. Normally that wouldn’t even be a problem because we don’t use the debit account for major purchases. The strategy for any larger purchases is to use our Costco American Express or our Visa that we pay off at the end of the month. By doing this, we reduce the need to monitor our accounts as much and we also get cash back each year from Costco. Unfortunately my wife wasn’t paying attention and used the debit card instead of the credit card.

The good news is that it was a lesson learned and didn’t cost us any fees. Yet another reason that I’m much happier with my credit union than a commercial bank.