Tuesday, March 15, 2005

Understanding Your Bank Statement

Bank statements are brimming with alphabet soup
By SUE STOCK, Staff Writer


Checking your monthly bank statement nowadays involves a lot more than looking at which deposits and checks cleared. Bank customers now need to understand three-letter banking codes.

The little gems are popping up now more than ever because more people are paying electronically -- with a debit card, electronic check, over the phone or online.

E-payments save companies substantial money because they eliminate the need to process paper checks. The Federal Reserve estimates an average bank savings of $1.62 on each e-payment.

With that kind of money at stake, companies are working hard to get consumers to switch to electronic payments. They have been largely successful.

Since it looks as if they are here to stay, here's what those little codes mean.

ACH (automated clearinghouse): This is the basic term for the nation's largest electronic payment system. Companies and banks save money by sending their payments to the clearinghouse in batches, instead of individually.

POS (point of sale): Typically, this is a purchase in which a debit card was swiped at the store. Sometimes debit card purchases simply appear as "purchase" with the name of the merchant. It depends on the retailer's technology and whether your debit card has a Visa or Mastercard logo.

PPD (prearranged payment and deposit): This appears if you have given permission for a company to automatically withdraw a regular payment such as a utility bill. It also may appear for regular deposits, such as a paycheck.

POP (point of purchase): This appears when you write a check at a store or doctor's office and it is turned into an electronic payment at the register. Your check is run through a machine that takes the information from the check. Then you sign an authorization slip that is similar to a credit card receipt, and the check is returned on the spot. Wal-Mart and Jiffy Lube use this process.

ARC (accounts receivable transaction): When you mail a check to a company, it can capture the information from your check and turn it into an electronic payment. The company name should show up on your bank statement. Companies should notify you in writing that payments will be processed this way. Many such notices come with billing statements.

WEB (Web-based payment) and TEL (telephone payment): This means a purchase was made on the Internet or authorized over the phone.

RCK (represented check): This category is for checks that have bounced and are being presented again to the bank for payment. If a check has bounced, it can be turned into an electronic payment, because it costs less to process it this way. On your statement, it will say "REDEPCHECK" and list the check number.

© Copyright 2005, The News & Observer Publishing Company,a subsidiary of The McClatchy Company

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