You have a debit card, if you’re like most people. If so, you’ve gotten your letter in the mail from you bank politely asking if you would like to continue enjoying its debit card overdraft coverage. Banks are forced to ask you this because of new credit card rules, that make banks give you the option of saying “no thanks”. Consumer complaints about spiraling bank overdraft fees helped spur the change in regulations . 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.
Naked greed – debit card overdraft coverage
When debit card use started taking off, Jeff Gelles at the Philadelphia Inquirer said that banks smelled big money and right away started scheming about how to blur the distinction between debit and credit cards. Debit cards draw on money with 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 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 loans than to let your bank rip you off with debit card overdraft fees.
Bank of America finds its conscience
You should take this chance to break free from your bank’s overdraft coverage, Gelles said. That’s’ such good advice, even Bank of The United States 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.
Bank overdraft fees a license to steal
The penalties can add up fast with bank overdraft fees because you do not realize it happens at the time. Whenever you get charged once, you could 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, do not you?. No law limits the bank to how many times it can pick your pocket. Up to four overdrafts a day, or $ 140, is Wachovia’s policy. Citizens Bank will charge up to seven at $ 37 apiece, or $ 259.
Bank overdraft fees can be avoided
That too many individuals are lousy at balancing their checkbook is a problem highlighted by new credit card rules about bank overdraft fees. To stay 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 in your check register, not on your ATM slip.
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. Deposit a couple of hundred dollars and don’t record it as part of your 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
