Tuesday, July 7, 2009

A Budget Backfire!

Well, shoot!

My No Spending Challenge and my ultra frugal Envelope Shopping System for June ended up biting me in tush!

I have a fabulous 4% checking account through my credit union. Yes, you read right - my checking account pays 4%. However, there are a few rules to get it:

  1. Direct deposit
  2. Minimum of 10 debit card purchases
  3. Minimum 4 log-ins to their online banking system
  4. Receive eStatements (emailed bank statements.)
Can you guess why I didn't get my interest last month? Yep. I only made 8 debit card purchases!

Part of me is really irritated. I mean here I am, trying my hardest to save money and keep it in the bank and they are penalizing me for not spending it! In this economy, slapping people on the wrist for not spending seems a bit irresponsible.

On the other hand, I can't help but see the humor in it...

Last month I did so good at not spending money that I forfeited my interest rate. Let me say, this has never happened to me before. Ever since I've had the account I have had no problem meeting the requirements.

So, what to do? I really liked using the envelope system and frankly, it saved me a lot more than I would have earned in interest. I am definitely not going to go out of my way to use my debit card more just to get a little extra cash, (no matter how much I like bank interest) - that way there be dragons. It would be quick trip down a slippery over spending slope. I'll just monitor how it goes the next couple of months and see if this a fluke, or if maybe there is a better account for me. I am also going to write the credit union a letter. I see why they have the requirements they do, and I don't particularly think they are unreasonable, but nonetheless, I would like to express my opinion on the matter.

Heh. My boss always warns me to keep an eye out for unexpected consequences. I certainly didn't expect this!

Photo by: NoHoDamon


Simplelivin' said...

You def. could have bigger problems! :-) 4% is a lot right now, my ING SAVINGS just dropped to 1.4%! We are using cash this month for our Limited Spending Month for everything but gas since we get 3% back on the card. It may be little, but it does add up though the year.

Kari said...

That really stinks on one hand but on the other hand BRAVO to you for doing so good at it all.

Frugalchick said...

Oh no! I like your idea of reevaluating the account--a few bucks in interest is definitely worth gicing up if you spend a lot less overall.

Dawn said...

Simplelivin' - I have an ING account too for some savings that I like to keep out of my general funds. I'd love to see those rates pick up a little too. Ah well.

Kari - Thank you so much! It does stink a little, but I can't help but see the bright side in it.

Frugalchick - I agree. Overall, I saved a lot by going with the envelope system, far more than I would have got in interest... it would be nice to get both though!

April said...

So take out your monthly envelope amount in 10 debit transactions, one after the other, convert any bigger bills to smaller ones (depending on what size bill your ATM spits out--my bank only spits out $20--clever, huh?), and put your $$ in envelopes and go on your merry way!

Michelle said...

That is the BEST budget backfire EVER. well, I exaggerate, but it's pretty funny! I really appreciate that you enjoyed the envelope system - and if you plan this month, you'll get the double-benefit of the interest PLUS the cash-envelope savings. Does the 10 transaction limit mean just pin-based transactions, or can it be using it like a CC? if the latter is true, you can use the checkcard to pay some of your regular bills (that wouldn't be envelop'd anyway). Just a thought and keep plugging at it!

Miss M said...

Actually I think they offer the high rates because they know most people won't make enough purchases to qualify, they get new customers with an attractive rate and then don't actually have to pay it out. This is one of those good budget backfires, most people go over budget by more than they would earn in interest.

Dawn said...

April - I'd love system, except that I am pretty sure they mean debit card purchases, as in paying at the cash register with the card. Otherwise that would work great!

Michelle - isn't is funny? Like you, I had to appreciate the irony in it. Your idea of using it like a CC to pay ongoing transactions is a good one. I have all my bills paid through their online billing system, but I could look at switching a few over.

It is just that a lot of the purchases I used to make with my debit, I do differently now. Last month I used cash for home improvement and groceries - a fair number of debit card purchases right there, and I am using a particular credit card for gas purchases that gives me $.05 a gallon. Last month I was on a no spending challenge so I didn't eat out much or buy much, hence, fewer transactions. I don't think I will have a problem hitting it this month though.