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Have you ever thought about all the inconsistencies that occur in the modern banking industry? With all the computers and digital banking and everything else, why can't a bank instantly account for money you put in or money you take out? If you make a deposit at the ATM, you still have to wait a day for the deposits to become available. Why? It's all digital, just uplink and calculate. And why does it take the same amount of time for an online bill payment to clear your account as for a check? I can't tell you how many times this causes a bounced check to occur, because people write checks or make payments based on money they expect to be transferred to the account but for some mysterious reason has not arrived yet. Even if you transfer money online from your PayPal account, depending on your bank it can take three or four days for the transfer to clear. Rediculous. Your bank knows PayPal has the dough, so why can't they instantly make it available? Yet if you use PayPal to make a payment using your credit card or bank account the money instantly is subtracted from your account. You can see how a bounced check is likely to occur since money gets withdrawn from the account faster than it is deposited. Then the bank charges you $25 to $35 per check in penalty fees for bouncing that check, even though it's really the bank's fault anyway and that escalates into more bounced checks and fees because you've likely written checks on the money the bank took out for fees.

What's really going on is that the bank likes to sit on your money and earn interest on it while it's hanging out there in limbo. They also know how many of us are writing checks on money that was deposited that same day, so they purposely create a void of time that causes checks to bounce and makes more money for the bank. If you have enough money that you don't have to write checks on money you deposit the same day, you won't bounce so many checks. But if that's not your situation, then you need some ways to avoid bounced checks and overdraft fees or get protection against bounced check problems.

The Federal Reserve suggests that you can avoid bounced check issues by being extremely aware of how your account works. First, they say, pay close attention to all your transactions, especially electronic ones, and record the amounts of any checks you write. Also record withdrawal fees and purchases. Then, remember to write in any automatic payments that are made from your account, such as paying utilities with an online payment system, and remember that some amounts for automatic payments haven't been subtracted yet.

A good financial practiced recommended by the Federal Reserve and other advisors is to get overdraft protection against bounced checks. Most of these overdraft protection plans take money from your savings account or credit card in order to cover a bounced check and fees associated with it. This keeps you from racking up hundreds of dollars in fees because one bounced check turned into a chain of bounced checks because of the fees. Remember, though, that these systems will cost you something-just not as much as a bounced check.