You’ve a debit card, if you are like a lot of 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. New credit card rules are forcing banks to give you the option to discontinue debit card overdraft coverage, hence the letter. Consumer complaints about spiraling bank overdraft fees helped spur the change in regulations . If you haven’t made your decision yet, keep in mind that banks are selling the service for one reason: they make money doing it.
Debit card overdraft coverage is theft
When debit card use started taking off, Jeff Gelles at the Philadelphia Inquirer said that banks smelled big money and right away began scheming about how to blur the distinction between debit and credit cards. Your checking account supplies the funds for your 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. Instead of letting your bank pick your pocket with debit card overdraft coverage, it makes more sense to get a pay day loan when you’re short of cash.
Bank of The United States finds its conscience
You should take this chance to break free from your bank’s overdraft coverage, Gelles said. Even Bank of The US thinks that’s good advice. Debit card overdraft coverage will no longer be offered by Bank of America, the business announced last spring. The New York Times reports that other banks could possibly be forced to do the very same to compete for customers, although the lost revenue will cost tens of millions of dollars a year.
Bank overdraft fees – a runaway train
Because the offending transaction goes unnoticed, debit card overdraft fees can get out of hand in a hurry. When you get charged once, you can keep getting charged until you understand what’s going on, Gelles said, as the Starbucks barista doesn’t say “You know this is an overdraft, don’t you?. No law limits the bank to how numerous times it can pick your pocket. 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. 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 with your check register, not on your ATM slip.
2.Stay on top of all deposits, receipts and withdrawals with 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. Deposit “ghost” money with your checking account. Put a couple of extra hundred dollars within the account and keep it off the books. Account for the extra cash whenever you balance the account.
6. Make certain you are aware of the opportunities your bank provides for avoiding potential overdraft situations.
philly.com
nytimes.com
prweb.com
