Chances are good you have a debit card. 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 have been forced to ask you this because of new credit card rules, that make banks give you the option of saying “no thanks”. Out of control bank overdraft fees generated enough consumer complaints to get the Federal Reserve to change the rules . Before you make your choice, keep in mind 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.
Article resource: Why opting out of debit card overdraft coverage is a good idea by Personal Money Store
Naked greed – 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. When your checking account runs dry and also 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. Getting a pay day if you are short on cash is smarter than letting your bank shake you down with debit card overdraft fees.
Overdraft coverage is unethical, says Bank of The United States
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. Bank of The US announced in March that it will no longer offer 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 can steal you blind
The penalties can add up fast with bank overdraft fees because you do not realize it happens at the time. Gelles said that since the Starbucks barista doesn’t say “You know this is an overdraft, do not you?, you could 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 are on to them. Wachovia will charge you for up to four overdrafts, or $ 140, a day. Citizens Bank is greedier, with up to seven overdrafts at $ 37 each for a total of $ 259.
Preventing 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. In a press release, Michael S. Kappas, President and CEO, Apprisen, offers tips for avoiding overdraft fees or the embarrassment of having a purchase declined:
1. Remember your true account balance is in your check register, not on your ATM slip.
2.Stay on top of all deposits, receipts and withdrawals as part of your check register.
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 with your checking account. Throw an additional few hundred bucks in there and don’t write it within the register. Don’t forget to account for the ghost funds when you balance your account.
6. Make sure you are aware of the opportunities your bank provides for avoiding potential overdraft situations.
philly.com
nytimes.com
prweb.com
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