You’ve a debit card, if you are like many people. So you’ve already received a letter from your bank about what a great service debit card overdraft coverage is, and just how significant it is for you to keep it. 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. Out of control bank overdraft fees generated enough consumer complaints to get the Federal Reserve to change the rules . If you haven’t already decided, bear in mind the only reason you got that letter is because banks make severe money charging penalties for that service.
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. Debit cards draw on money inside your checking account. Overdraft coverage charges a debit card overdraft fee whenever you use the card and there isn’t enough money left within 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 payday loan when you’re short of cash.
Bank of America finds its conscience
Gelles said you should decline your bank’s offer to extend overdraft protection. Bank of The United States, as unlikely as it appears, agrees with him. In March Bank of The United States announced that it will do away with debit card overdraft coverage. 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 same.
Bank overdraft fees get out of hand
Debit card overdraft fees can easily get out of hand since the offending transactions go unnoticed. Whenever you get charged once, you can keep getting charged until you understand what’s going on, Gelles said, because the Starbucks barista doesn’t say “You know this is an overdraft, don’t you?. No law keeps the bank from taking your money until you’re on to them. But Wachovia gives you a “break” by stopping at four overdrafts a day, or $ 140. Citizens Bank is greedier, with up to seven overdrafts at $ 37 each for a total of $ 259.
Get organized to stay away from 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.Stay on top of all deposits, receipts and withdrawals with your check register.
3.Know your checking account balance before you make a debit card purchase or ATM withdrawal.
4. Balance your account at least once a month.
5. Pad your checking account with “ghost” funds. Deposit a couple of hundred dollars and do not record it with your register. Account for the extra cash when you balance the account.
6. To avoid potential overdraft scenarios, talk to your bank about your opportunities.
philly.com
nytimes.com
prweb.com
