Money Saving Tip: Check Your Account Statements

The other night on the way home I caught a bit of The Clark Howard radio show.  Howard is a consumer advocate and author with a great radio show that I don’t often catch because it is on after 6:00pm in my market, a time I’m usually spending with family after a long day at the office.  One call in particular really caught my attention that night, partly because of the situation the guy found himself in, but mostly because of the way he discovered the mess.

A Little Background

Hard to obtain all the details about the individual’s case in a five minute phone call, but here is a quick summary of the call.  According to the caller he owed about $5,000 on a credit card that was charged off a couple years ago.  Apparently, the creditor eventually got around to collecting (probably after they sold the debt for pennies on the dollar) and contacted him to work out a payment arrangement.

The caller agreed to send the collector $500 a month for 12 consecutive months to pay the debt off in full.  He faithfully sent along his payments for $500 each month, and at the end of the year he checked his statement and the outstanding balance was $5,400.  Apparently, the balance had actually gone up thanks to a 31% interest rate and various fees!  I’m not sure how accurate the guy’s numbers are, but his story serves as a great reminder for those dealing with collectors, or any creditor for that matter.

Always Check Your Statement

The caller’s story was troubling for a couple reasons.  First of all, if he could have scraped up a little cash (or already had some in savings) he could have probably settled the debt for a couple thousand dollars as settlement-in-full.  He should not have done anything without receiving the terms of the workout offer in writing from the collector.  And he definitely should have been checking his statement all along to make sure his payments were being correctly applied and his balance was reduced accordingly.

I can’t believe he actually waited a full year before checking, or requesting, an updated statement on his account.  Unfortunately, there are still a lot of people out there who trust banks and collection agencies explicitly.  The hard truth is that there are a number of unscrupulous agencies out there running around collecting old debt who use any number of tactics to separate you from your money.

I’m not telling you that every collector you come in contact with will lie to get money from you, but I am telling you 99% of them will. I know, I used to work in a call center environment (thankfully I didn’t have to do much collections, but I worked next to them).  It was common practice to use all sorts of pressure tactics to talk people into making payments over the phone, or give up details of their checking account for auto-drafts of their accounts.  The next call from that customer usually came to us in customer service–“Why did you guys wipe out my entire checking account, I only agreed to $25 a month?”

Of course, I had to tote the company line at the time, but secretly I wanted to tell these people, “They took out all of your money because they lied when they said they wouldn’t.”  Plain and simple.  So please, always get these work-out agreements in writing, and always keep up with your account statements to hold the collector accountable for following through on their end of the deal.


  1. You’re right about those call centers. The charitable ones are just as bad. Several years ago I got a cold call from a charitable organization that was looking for $40 or $100 donations to send kids to camp. A number of local professional hockey players were endorsing the charity and it was very high profile. The call came in to my family’s house and I just happened to be the one to pick up the phone.

    Since I was a full-time student on a limited income, I was working 30 hours a week in addition to a full course load in order to pay my tuition. Every dollar had to be accounted for. So I couldn’t afford a $40 donation but offered what I could afford, which was $10. Well… they TOOK $40, and I didn’t know it until I read my statement. It was just my dumb luck that my statement came soon after that.

    I called the charity immediately, and the woman in the customer service department denied that anything had been done wrong. She told me I had in fact given permission for them to take $40, even though my notes and records clearly said $10. She actually said: “If you take the $30 back, there’s a kid who isn’t going to get to go to camp. Are you really sure you want to take that opportunity away?” My response was not polite and I won’t repeat it here, but after several months of wrangling I did get my $30 back.

    (Who do they think they are to take my hard-earned money and redistribute it to more “deserving” people without my permission… the federal government?)

    I also asked to be put on their Do Not Call list, but they didn’t respect that either and had to be reported to the federal authorities. It turns out the charity itself was contracting out the work to a call center, which apparently is customary. My name, address, and phone number were therefore sold to a variety of call centers and the household was deluged with calls for a long time.

    It’s now my policy never to buy anything from a phone or mail solicitation. That’s unfortunate since there really are legitimate charities out there.

  2. It is unfortunate but it seems we have to save people from themselves.
    Mr. Common-sense: “Please don’t touch the hot stove.”
    Mr. No-common-sense: “Why not?”
    Mr. Common-sense: “It’s hot. It will burn you and cause you much suffering as you recover from it. There’s not much point in touching it anyway.”
    Mr. No-common-sense: “Oh” (Touches stove anyway.)

    It’s because of people like this we have instructions printed on the sides of toothpick boxes:
    1. Hold stick near center of its length.
    2. Moisten pointed end in mouth.
    3. Insert in tooth space, blunt end next to gum. 4. Use gentle in-out motion.

    (Points to those who can name the reference!)

  3. I am the branch manager of a reposession company and I hear the same story from many of the people who pass through my office. The lienholders are notorious for telling people “No we won’t take your car if you make a payment.” When you are 3 months behind…THEY WILL STILL TAKE YOUR CAR.

  4. 10 points for you FrugalDad! 🙂

    I love how he built his house with him on the “outside” and the rest of the universe on the “inside” so he could keep an eye on it until it became more sane.

    Unfortunately, collection centers/companies are caught between a rock and a hard place. They have to do those bad things that other people don’t want to do but at the same time they take advantage of those who can basically do nothing about it which gives them a horrendous reputation. This is why a “stitch in time saves nine” in that you either take care of your problems before it gets to that point or concede and let the item go.

  5. @Clever Dude: No, I didn’t! Ha! Perhaps I should be more selective of my images. Then again, it’s good for a laugh, and I could use one today.

  6. LOL, still laughing about the “Long Johnson” reference. I didn’t notice that until I read CleverDude’s comment.
    Good post. In general, it is a good idea to check any and all statements not only those from creditors. I go through my bank and credit card statements with a fine tooth comb to make sure everything matches what it is supposed to be.

  7. I just want to add my 2 cents,
    Rule number one:
    Always always always check your bills, account statements and all papers related to your financial dealings. This is sort of close radius check.
    Rule number two:
    Check your credit bureau reports regularly, at least twice a year! This one is far radius check.

  8. Everyone should be able to access their statements online on a daily basis or you can even use software to help you look at all your accounts from in one convenient place.

  9. Never give electronic access to your accounts.

    Considering the tactics they use, I’d only pay a collector with postal money orders – cheap and easy to track (you really don’t want a collector to have your checking account number)

  10. “It is unfortunate but it seems we have to save people from themselves.”Yes blame the victim, it works every time.

    Frugal Dad please don’t take this personally as I really like your blog, but postings and comments like this (and the election one) are a good reason why the GOP lost the Presidency, the House and Senate and GOP Ideology has been thoroughly discredited.

    NeoCons all said “Government is Bad, get rid of Government” and proceeded to tilt the field firmly in favour of business and then blamed the victim. Who’s fault is it when someone in good faith makes there payments each month only to have the CC company hold the payment in order load the card up with fees.

    Who’s fault is it when CC companies entice students (often by lying) into taking why more debt than can ever possibly pay back, making them into indentured servants with the only hope of ever escaping the debt is to leave the country. Whose fault is it that bankruptcy laws were re-written to make lending to recently bankrupts the profitable form of lending.

    You love to blame the victim conveniently ignoring the fact that the very regulations that protect the innocent (and stupid) from being taken advantage of were gutted in name of Free Markets. Regulations that you all love to trash aren’t designed to prevent you from doing stupid things but to prevent people from being cheated. THERE IS A DIFFERENCE.

    Let me guess, FD you’ve never done stupid like making impulse purchases or taking on more debt than you really should. If Obama does a left turn you have only yourselves to blame.

  11. @Rob: I appreciate your comments. I won’t try to respond to each of your points. After all, I doubt there is anything I could say that would persuade you one way or another. In fact, I won’t even try, because that’s what makes this blog fun–if we all agreed on every point it would get pretty boring!

    The only thing I take exception to is your assumption that I’ve never done anything stupid like make impulse purchases or taken on more debt than I should. I readily admit to doing stupid (with zeros), and do so often here on the blog. I am continuing to pay for those past mistakes. But, I have sacrificed to pay for those mistakes. I’ve worked weekends; I’ve built a profitable side business with $20; I work about 60 hours a week, and we pay over half our income on debt while living frugal to make it on the rest. I never blamed anyone other than myself, and I never asked for anyone to bail me out.

    Yes, credit card companies do sometimes cheat, and when they do they should be punished (especially in your example of holding payments, etc.). That, we can definitely agree on!

  12. I supposed now that the election is we should all get out of election mode 🙂

    I should clarify my point slightly. I agree totally with those who say that you should take responsibility for your actions. (as an aside I can tell you bankruptcy and consideration loans don’t work). If you get in debt you need to get out of debt, best way is to pay it off.

    My main point in all of this is that the field has been tilted to much in the favour of the companies and sometimes peoples comments don’t reflect that.

    Unfortunately in comment fields sometimes things come across differently than before.

  13. BTW I didn’t mean to imply you’ve never made any mistakes, you wouldn’t have a frugal living blog if you didn’t. Sorry about that. Rob

  14. @Rob: No problem, we’re still friends. I second your call to get out of “election mode!” Frankly, I tired of politics in general after our 20 month election cycle. Before you know it, they’ll be cranking up for 2012!

  15. Back on track, I want to second the point of paying attention to your bills. I was always lazy about keeping on top of thing, inspired by several blogs I started paying closer attention to my statements. I was quite horrified to find that over a 4 month period my balance went sideways. I had missed a payment or two, was late in getting payments made etc.

    After that I set up a spreadsheet and made sure I got the payments on time!