You have a debit card, if you’re like a lot of people. . This letter is a result of new credit card rules that require banks to ask you if you would rather opt out of paying for an overdraft and just have your purchase declined. Consumer complaints about spiraling bank overdraft fees helped spur the change in regulations . Before you make your choice, keep in mind that the only reason banks are trying so hard to convince you to keep debit card overdraft coverage is because they make big money charging overdraft coverage fees.
Naked greed – debit card overdraft coverage
Jeff Gelles at the Philadelphia Inquirer reports that when debit cards came into fashion, banks saw a new way to steal from their customers by confusing them about the nature of 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 is not enough money left in the account to cover the purchase. That’s where the “$ 40 cup of coffee” came into being. Rather than letting your bank pick your pocket with debit card overdraft coverage, it makes more sense to get a pay day loan when you are short of cash.
Overdraft coverage is unethical, says Bank of America
Gelles said you need to decline your bank’s offer to extend overdraft protection. That’s’ such good advice, even Bank of America agrees with him. Debit card overdraft coverage will no longer be offered by Bank of America, the company announced last spring. The New York Times reports that lost revenue from debit card overdraft fees could cost B of A tens of millions a year and other banks could feel the pressure to follow suit.
Banks rob customers blind with overdraft fees
Debit card overdraft fees can effortlessly get out of hand because the offending transactions go unnoticed. Gelles said the Starbucks barista doesn’t say, “You know this is an overdraft, do not you?” so when you get dinged once, you may get dinged over and over until you realize what’s going on. No law keeps the bank from taking your money until you are on to them. But Wachovia gives you a “break” by stopping at four overdrafts a day, or $ 140. Citizens Bank will charge up to seven at $ 37 apiece, or $ 259.
Preventing bank overdraft fees
The new credit card rules about bank overdraft fees draw attention to the problem that too numerous consumers are poor managers of their checking accounts. 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. Remember your true account balance is as part of your check register, not on your ATM slip.
2.Keep track of all deposits, withdrawal slips and purchase receipts. Record those as part of your check register.
3.Check your balance before you use your debit card or a cash machine.
4. Balance your account at least once a month.
5. Put “ghost” funds in your checking account. Throw an extra few hundred bucks in there and don’t write it within the register. Whenever you balance the account, account for the extra cash.
6. Talk to your bank representative about your choices for avoiding all potential overdraft situations.
philly.com
nytimes.com
prweb.com
