Why You Shouldn’t Setup Automatic ACH Payments on Your Checking Account

I recently ended a monthly payment agreement with a company that was providing me with a business service. The cost per month was about $8. I had reservations from the beginning about signing up because it was requesting that I sign up for automatic monthly ACH payments. I don’t like giving out my account number, even in the form of checks, because of all of the warnings about identify theft. Nowadays, thieves can process payments online using your account number and the routing number of your bank without your signature. I was especially nervous about the “automatic” part of it.

So instead of linking the automatic payment to my main account, I linked it to an old open account at a different bank and decided to just make a regular deposit to cover the $8 fee per month.

It has been a nightmare ever since. On a few occasions I have forgotten to deposit more money in that account before the $8 automatic ACH was processed, causing overdraft fees at my bank. A few times they gave me a break, but on at least one occasion I had to pay a fee of over $30. I literally have about 15 bills to pay on a monthly basis — all of which are paid at varied times of the month, so I can’t always remember every detail of my finances. The bank doesn’t care about that though — they look forward to any opportunity to charge excessive fees.

When I ended my agreement with the company last month, they agreed to send me my final bill in the mail, rather than charge my checking account. So I withdrew the balance left in that checking account and went along my merry way, planning to let that account go dormant again. Days later I decided to check on that account online, just to make sure everything was fine. It wasn’t.

The very day after I called and officially ended my monthly arrangement with the company… the day after I had gotten verbal confirmation from the company that they would send my final bill in the mail… the day after I withdrew that last bit of cash from the old account, they submitted an ACH charge to my checking account for the final bill without my knowledge. Go figure.

Since I was a day late (and several dollars short) the bank had already sent the company’s payment attempt back for non-sufficient funds and charged my account $34! When I called to dispute the charge, the bank told me that they couldn’t dispute it anymore since it was sent back, and I was getting charged $34 whether I liked it or not; regardless of who’s fault it was.

If I had never given that company my account number this never would have happened. If I had been able to use a credit or debit card instead, I could have canceled the card and gotten a new one to avoid being charged without my consent. But now, since I gave that company my account number, they can basically do what they want to my account, and my bank won’t do a thing about it since they are all about the money.

Side note: think about it. If a “legitimate” company can get away with this, what about a fraud?

To avoid this ever happening again, I see my only recourse as closing the checking account for good. This is an account that I had for over a decade, and now because of an unscrupulous company that has those digits, I have to get rid of it. Who knows if they will make another mistake and charge my account again in the future, then I would have to pay another $34 fee. My account has been compromised forever. Who knows where this small company keeps their files full of private customer information.

So if you have a checking account that you value, don’t sign it up for automatic ACH payments that you can’t control, especially with a small company that isn’t well known. Once that company has your account number, that’s it. You will never really have peace of mind with your account again.