Are Checks Obsolete?


Are Checks Obsolete?



 

 

Checks hold an odd place in our personal finances. In many ways, checks seem like relics from a previous era. We maybe write one or two checks a month (usually for rent or similar bill-paying situations where electronic payment simply isn’t an option). This is vastly different from only a few decades ago, when checks represented more than 85% of all non-cash retail payments. (Can you imagine whipping out a checkbook in line at the grocery store? Times have certainly changed!)

 

However, despite their gradual decline in use, checks haven’t become completely extinct. We still keep our money in checking accounts, we still balance our checkbooks, and new banking technologies (mobile check imaging is one example) are being introduced to improve the process of paying by check. Writing checks continues to walk the line between permanence and obsolescence.

 

Whether or not checks are on their way out, there are still a couple of check-related best practices that you need to be aware of in order to stay on top of your finances.

 

Holding periods exist, and you need to keep track of them

 

Checks often get a bad rap for the amount of time they take to clear. This is referred to as a holding period, and it can vary anywhere from a day to over a week, depending on your financial institution.

 

The clearing process itself is made up of several steps. First, the financial institution that receives the check for deposit encodes its dollar amount into the machine-readable numbers along the bottom of the check. Then the physical check is fed through a machine that scans its data. That data is then sent to a clearinghouse, which forwards the information to the financial institution that issued the check. The financial institution makes sure the check-writer’s account has sufficient funds to make the payment—if it does, the transaction goes through, but if the account has insufficient funds to complete the transaction, the check bounces.

 

Check clearing might sound like a long and overly complicated process, but it has come a long way. In 18th century England, the check clearing process was considerably less efficient. It involved clerks from each London bank meeting up at a tavern on Lombard Street to exchange checks and settle account differences—not the most scalable process!

 

The introduction of mobile check imaging (also known as remote deposit capture) and other technologies is helping to shorten the holding period; however, to avoid fees, bad checks and other sticky situations, it’s still important for you to understand what the holding period is at your credit union or bank.

 

If you’re the check writer: the holding period, combined with some absentmindedness, can create a situation where you’re spending money in your account that you don’t actually have. For this reason, when you write a check, it’s best to pretend that the related amount of money is already gone from your account.

 

If you’re the check receiver: keep in mind that when you deposit a check and the money shows up in your account, the check may not have cleared yet. Your financial institution may allow you to spend a portion or all of that deposited check, but if it bounces, you would be the one responsible for repaying any funds you used before the check bounced. It’s a good practice to confirm that a check has cleared before spending it. When in doubt, you can always give your financial institution a call to verify the status of a check.

 

Balancing a checkbook is still an important skill

 

The best way to avoid tricky scenarios created by holding periods is to keep track of your transactions with a checkbook register. Traditionally, checkbook registers are those lined notebooks that come with your checks, but you can use any system that works for you, whether that’s a printable form, a digital spreadsheet or even an app on your phone.

 

Recording your transactions as you go will give you a more accurate idea of your account balance and help you avoid unnecessary fees or overdraft charges. It also takes the guesswork out of writing a check or making an ATM withdrawal—you will know whether or not you have the money in your account to cover it. Comparing your checkbook register to your monthly statements also makes it easier for you to spot any errors or fraudulent charges.

 

Start by recording all your checking account transactions in your checkbook register—debit card payments, checks written and received, and ATM withdrawals. Include online bill payments and direct deposits too—since those are sometimes automated, it can be easy to forget them. When you get your monthly statement, compare each transaction to your checkbook register and put a checkmark next to each transaction that matches your statement. If items in your statement do not match your checkbook register, figure out what’s at cause. Sometimes it’s an entry error or a slip-up in your math, but it could be an error by your financial institution.

 

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Since we are not yet a totally digital society, understanding how to use paper checks as well as keeping track of all of your transactions will keep your checking account in the black and your financial matters running smoothly.

November is National Adoption Month


November is National Adoption Month
Money Should Not Prevent Families from Pursuing Their Dream of Adoption


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By: Cameron Dickey, President/CEO of Cy-Fair FCU

 

This November marks the United States’ 19th annual National Adoption Month. Funded by The Children’s Bureau within the U.S. Department of Health and Human Services, National Adoption Month brings attention to the many children and youth in Texas and across the United States in need of permanent families.

 

The topic of adoption hits close to home for me. Having grown up alongside a family with adopted twins, I was exposed at an early age to the wonderful benefits adoption holds for both the children and families. By the time I met and married my wife, we both knew that adoption was something we valued and wanted in our future. And today, we have the joy of celebrating the gift of our adopted son Dillon, who officially joined our family exactly five years ago on November 6, 2010.

 

When we first began looking into the possibility of adoption, the options and process were overwhelming. From international adoption to foster adoption, there are multiple routes you can go. The sheer number of agencies and information alone requires careful research, as well as time and energy. Once you’ve identified a child to love as your own, another year of paperwork, meetings and a degree of uncertainty can ensue. It’s not uncommon to have hiccups along the way.

 

And then there’s the cost.

 

If you or someone you know has considered adoption, you understand how expensive it can be. The average cost of agency, independent and international adoptions can run upwards of $30,000. Adoptions of children from the state Foster Care system can cost much less but they are still expensive.  Such expenses can be prohibitive for many worthy families and discourage would-be parents from pursuing their hearts’ desire.

 

As the proud father of an adopted son and as President & CEO of Cy-Fair FCU, I have a passion to help families achieve their dream of adoption. I firmly believe that no willing family should be prevented from adopting a child in need because they can’t afford the upfront cost. One way Cy-Fair FCU has chosen to help families interested in adoption is through our Lifestyle Loan program. This is a unique, low-cost way to help cover associated costs. If you’re approved for the program, we will make payments on your behalf directly to an adoption agency or other related organizations involved in the process.

 

If you’re considering adoption but are unsure exactly how to pay for it, a good place to start might be visiting a Cy-Fair FCU branch near you. One of our staff members would welcome the opportunity to see what might be available to you through our Lifestyle Loan program. Depending on the specifics of your situation, this may be a great way to pay for all or part of your adoption. Beyond that, I would also encourage you to consider additional opportunities for financial assistance, such as grants, fundraising support and any applicable federal or state tax credits.

 

Having been through the adoption process and come out on the other side, I understand that there are many concerns to work through.  Will I bond with this child like my other children? In my experience, resoundingly YES. Will he/she get along with my current family members? They are brothers and sisters that love, fight, and protect one another…there is no detectable difference derived from how they came to be in our family.  Can I afford caring for another child in the years ahead?  This is a personal consideration for every prospective parent whether the child is your biological offspring or adopted – but our family has found that the costs associated with parenting are smaller in early years and grow slowly to bigger numbers in the late teens.

 

Regardless of how you answer the above questions for you and your family, my belief is that your actual ability to fund your adoption, should never be a barrier to expanding your family through adoption.  There are costs associated with pursing adoption—emotional and financial. But, from first-hand experience, the joy of sharing your life with a child in need of a family is priceless.

Why Is It Called A Credit Union?


Why Is It Called A Credit Union?



 

While bank and banking are universally understood and accepted terms, the term credit union is still largely misunderstood and unknown to many. Credit union is an unusual term, isn’t it? Is it just another name for a bank? Is it a credit card company? Do I have to be in a union to join?

 

But, just like Jackson or Smith, Credit Union is our last name and we’re proud of it. It does beg the question, though—where did the name come from? We need to go way back to find the answer to that question and to understand the origins of credit unions.

 

The first working credit union models sprang up in Germany in the 1850s and 1860s and, by the end of the 19th century, credit unions had taken root across Europe. These upstart financial institutions, which drew inspiration from co-operative successes in other sectors, including retail and agriculture, went by a variety of names, including people’s banks, co-operative banks and credit associations. Some notable brand names from the time: the People’s Bank of Belgium, the People’s Bank of Milan, the Co-operative Bank in England, Crédit Mutuel in France, Casse Rurali Loreggia in Italy and the Anyonya Co-operative Bank Limited in India.

 

While these early credit unions had slightly different names, they were all best identified by their adherence to co-operative principles, especially those related to membership and control. Essentially, a co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. These enterprises are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility, and caring for others.

 

The first credit union in North America, the Caisse populaire de Lévis in Quebec, Canada, began operations in 1901 with a 10¢ deposit. Founder Alphonse Desjardins, a former journalist and the French-language stenographer for the Canadian House of Commons, was moved to take up his mission in 1897 when he learned of a Montrealer who had been ordered to pay nearly $5,000 in interest on a loan of $150 from a moneylender. Drawing extensively on European precedents, Desjardins developed a distinctive parish-based model for Quebec: the caisse populaire. The literal translation of caisse populaire is “popular cash register”, which speaks to providing access to cash and credit to people with limited income. These people were considered as less desirable customers by the established banks, who were in business to turn a healthy profit.

 

Did you know that St. Mary’s Bank of Manchester, New Hampshire, which now uses the term bank instead of credit union, was actually the first credit union in the United States? Assisted by a personal visit from Desjardins, the then-named St. Mary’s Cooperative Credit Association was founded in 1908 by French-speaking immigrants to Manchester from Canada’s Maritime provinces.

 

Pierre Jay, the Massachusetts Banking Commissioner, and Edward Filene, a Bostonian merchant and philanthropist, were instrumental in establishing enabling legislation in Massachusetts in 1908. Filene’s philanthropy and the practical implementation efforts of his associate Roy Bergengren were critical to the emergence of credit unions across the United States.

 

Unlike the credit unions of Germany or Quebec, most credit unions in the U.S. emerged from an employer-based bond of association. In addition to the advantages of access, information and enforcement that resulted from members sharing the same workplace, the employer-based bond permitted credit unions to use future paychecks as collateral.

 

Although the word ‘credit’ might make you think that the earliest credit unions offered only credit services, they usually also offered savings services, and often payment and insurance services as well. The word ‘union’ can also be confusing. At first blush, you may think that members of a credit union need to be member of a labor union, but that’s not the case. Members are simply united together because they share a similar situation. This affiliation can be where they live, where they work or what they believe in.

 

While ‘credit union’ may be a bit harder than ‘bank’ to grasp, it’s our name and we’re sticking with it! To paraphrase Shakespeare’s Romeo and Juliet, “A rose by any other name would smell as sweet”.