You’ve a debit card, if you are like many people. So you’ve already received a letter from your bank about what service debit card overdraft coverage is, and just how significant it is for you to keep it. 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 . If you have not already decided, bear in mind the only reason you got that letter is because banks make serious money charging penalties for that service.
Debit card overdraft coverage – money for nothing
When debit card use began taking off, Jeff Gelles at the Philadelphia Inquirer said that banks smelled big money and instantly started scheming about how to blur the distinction between debit and credit cards. Debit cards draw on money inside your checking account. When your checking account runs dry and you use your debit card, overdraft coverage charges you a hefty overdraft fee. So you could end up paying $ 40 for a cup of coffee. If you are short of cash, it makes more sense to get a paydayloans than to let your bank rip you off with debit card overdraft fees.
Overdraft coverage is unethical, says Bank of The United States
You need to take this chance to break free from your bank’s overdraft coverage, Gelles said. Bank of America, as unlikely as seems like, agrees with him. Bank of America announced in March that it will no longer offer debit card overdraft coverage. The New York Times reports that 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
The penalties can add up fast with bank overdraft fees because you don’t realize it happens at the time. Gelles said that because 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. 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, not quite as concerned about customer well being, will gladly pilfer $ 37 each for up to seven overdrafts a day: $ 259.
Bank overdraft fee prevention
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. 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. Remember your true account balance is inside 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. Balance your account at least once a month.
5. Put “ghost” funds with your checking account. Deposit a couple of hundred dollars and do not record it with your register. Whenever you balance the account, account for the additional cash.
6. Talk to your bank representative about your options for avoiding all potential overdraft situations.
philly.com
nytimes.com
prweb.com
