It is a good idea to opt out of debit card overdraft coverage

Chances are good you have a debit card. So you’ve already received a letter from your bank about what an excellent service debit card overdraft coverage is, and how essential it is for you to keep it. New credit card rules are forcing banks to give you the option to discontinue debit card overdraft coverage, hence the letter. 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 significant money charging penalties for that service.

Source of article: Why opting out of debit card overdraft coverage is a good idea by Personal Money Store

Debit card overdraft coverage is a scam

Jeff Gelles at the Philadelphia Inquirer reports that when debit cards came into fashion, banks saw a new way to steal from their customers by confusing them about the nature of debit and credit cards. Your debit card is funded by the money with your checking account. When your checking account runs dry and you also 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. Rather than letting your bank pick your pocket with debit card overdraft coverage, it makes more sense to get a pay day loan when you are short of cash.

Bank of The US finds its conscience

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. In March Bank of America announced that it will do away with debit card overdraft coverage. The New York Times reports that other banks might be forced to do the exact same to compete for customers, even though the lost revenue will cost tens of millions of dollars a year.

Bank overdraft fees can steal you blind

Debit card overdraft fees can easily get out of hand as the offending transactions go unnoticed. When 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, 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, not quite as concerned about customer well being, will gladly pilfer $ 37 each for up to seven overdrafts a day: $ 259.

Avoiding bank overdraft fees

That too many people are lousy at balancing their checkbook is a problem highlighted by new credit card rules about bank overdraft fees. 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. Do not forget that an updated check register has a more accurate account balance than an 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 inside your checking account. Deposit a few hundred dollars and don’t record it as part of your register. Don’t forget to account for the ghost funds whenever you balance your account.

6. Talk to your bank representative about your options for avoiding all potential overdraft situations.

philly.com

nytimes.com

prweb.com