You have a debit card, if you’re like a lot of people. . Banks are forced to ask you this because of new credit card rules, that make banks give you the option of saying “no thanks”. Out of control bank overdraft fees generated enough consumer complaints to get the Federal Reserve to change the rules . If you have not made your decision yet, keep in mind that banks are selling the service for one reason: they make money doing it.
The scam of debit card overdraft coverage
When debit cards came into vogue, Jeff Gelles at the Philadelphia Inquirer reports that banks saw big money to be made by confusing consumers about the main difference between debit and credit cards. Your checking account supplies the funds for your debit card. Overdraft coverage charges a debit card overdraft fee when you use the card and there isn’t really enough money left within the account to cover the purchase. So you can end up paying $ 40 for a cup of coffee. If you’re short of cash, it makes more sense to get a pay day loans than to let your bank rip you off with debit card overdraft fees.
Big bank pulls overdraft fees—could others follow
Gelles said you should decline your bank’s offer to extend overdraft protection. Even Bank of The United States thinks that’s good advice. Debit card overdraft coverage will no longer be offered by Bank of America, the business announced last spring. The New York Times reports the decision could cost the bank tens of millions a year in revenue from debit card overdraft fees and put pressure on other banks to do the exact same.
Bank overdraft fees get out of hand
Debit card overdraft fees can easily get out of hand because the offending transactions go unnoticed. Gelles said that since the Starbucks barista doesn’t say “You know this is an overdraft, don’t you?, you could get nailed all day long and not realize what’s going on until the bank has stolen all your money. No law limits the bank to how numerous times it can pick your pocket. But Wachovia gives you a “break” by stopping at four overdrafts a day, or $ 140. Citizens Bank, not quite as concerned about customer well being, will gladly pilfer $ 37 each for up to seven overdrafts a day: $ 259.
Preventing bank overdraft fees
That too lots of people are lousy at balancing their checkbook is a problem highlighted by new credit card rules about bank overdraft fees. To keep away from overdraft fees or the embarrassment of having a purchase rejected, Michael S. Kappas, President and CEO of Apprisen, offers tips in a press release:
1. Be aware that your check register is more reliable than an ATM slip for account balance.
2.Use your check register to keep track of all deposits, receipts and withdrawals.
3.Check your balance before you use your debit card or a cash machine.
4. At least once a month balance your account.
5. Put “ghost” funds as part of your checking account. Throw an additional few hundred bucks in there and don’t write it within the register. Account for the additional cash when you balance the account.
6. Make sure you are aware of the choices your bank provides for avoiding potential overdraft situations.
philly.com
nytimes.com
prweb.com
