You have a debit card, if you’re like a lot of people. . Banks have been forced to ask you this because of new credit card rules, that make banks give you the option of saying “no thanks”. The change in regulations was encouraged by consumer complaints about out of control bank overdraft fees . 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.
Debit card overdraft coverage isn’t because they care
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 debit card. When your checking account runs dry and you use your debit card, overdraft coverage charges you a hefty overdraft fee. That’s why that cup of coffee at Starbucks ended up costing you $ 40. If you’re short of cash, it makes more sense to get a pay day loan than to let your bank rip you off with debit card overdraft fees.
Overdraft coverage is unethical, says Bank of The US
Gelles gives the advice that you need to opt out of your bank’s overdraft protection “service”. That’s’ such good advice, even Bank of America agrees with him. In March Bank of America announced that it will do away with debit card overdraft coverage. The New York Times reports that other banks might be forced to do the very same to compete for customers, although the lost revenue will cost tens of millions of dollars a year.
The slippery slope of bank overdraft fees
The penalties can add up fast with bank overdraft fees because you don’t realize it happens at the time. Gelles said that as the Starbucks barista doesn’t say “You know this is an overdraft, don’t you?, you can get nailed all day long and not realize what’s going on until the bank has stolen all your money. There are no legal limits to how numerous times you are able to get penalized. 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.
Bank overdraft fee prevention
That too many individuals are lousy at balancing their checkbook is a problem highlighted by new credit card rules about bank overdraft fees. In a press release, tips for avoiding overdraft fees or the unpleasant experience of having a purchase declined are offered by Michael S. Kappas, President and CEO of Apprisen:
1. Do not forget that an updated check register has a more accurate account balance than an ATM slip.
2.Keep track of all deposits, withdrawal slips and purchase receipts. Record those in your check register.
3.Know your checking account balance before you make a debit card purchase or ATM withdrawal.
4. Whether you write checks or not, balance your account once a month.
5. Pad your checking account with “ghost” funds. Put a couple of additional hundred dollars within the account and keep it off the books. Whenever you balance the account, account for the additional cash.
6. Make certain you are aware of the choices your bank provides for avoiding potential overdraft situations.
philly.com
nytimes.com
prweb.com
