If you have a banking account you most likely have over drafted at one time or another. These fees can range from $10 to $38. Most major banks average between $25 and $30 per overdraft, which they usually cap at four per day. These fees can cost you a lot of money if you do not catch it right away. With the current economy most consumers are having troubles from avoiding this problem and as banks struggle to find increased profits they have adjusted policies and raising penalty fees.
A recent New York Times article pointed out that banks are making millions of dollars by charging their large overdraft fees.
“Consumers who overdraw often do not realize that overdraft coverage is automatic and that the bank will not simply cut them off when their balance hits zero. Many banks then refuse to turn off the coverage, even when a consumer calls to request a change.”
With these tough times there are still ways of protecting yourself from getting fee’d to death. By knowing your bank’s overdraft policies, opting into the right protection and also choosing alternatives are ways of avoiding overdraft fees. Most banks allow you to add a credit card onto the checking account so if you where to overdraft the bank would take the funds out of your credit card as a cash advance to cover the negative balance. You still have to be careful because even having a credit card on the account banks still charge a fee, most as low as $5.
Know Your Bank’s Policy
Go into your local bank and ask them what their policy is regarding overdrawn accounts. How much do they charge per overdraft and what kind of protection can you add to your account. Most banks offer over draft protection in the form of using your savings account or a credit card that is added to your checking account. Bank can stop your account from being overdrawn by not allowing your purchases to go over your current balance but most banks will not put this protection on. I have found that you must ask your banker if they can put this protection on your account for you and sometimes they will. The only way to find out is to ask.
Consider Prepaid Debit Cards
Debit cards are a necessity that most people carry instead of cash. Debit cards make transactions so much easier since you do not have to deal with change or cash. When a debit card is connected to a checking account, you still run the risk of overdrafting the account.
An alternative method to avoiding overdraft fees is to get a prepaid debit card. They are the same as any other debit card but not attached to your checking account. This will make it easier to make purchases since you don’t have to deal with exact change and also it will keep you from overdrafting your account. There are many places you can go to get prepaid debit cards, such as any cash advance store like ACE Cash Express. Not only are there no overdraft fees these cards can help you stay within a monthly budget.
Talk to a Bank Manager
When an overdraft fee does happen it can cause a lot of stress but do not panic as you do have options. If you do choose to dispute the overdraft fee(s), do not call customer service. You will be better off by going to your local branch and talking to the manager. Be sure that the fees have already been posted on your account since they cannot do anything until they have posted.
What seems to work best is making an appointment with your bank manager and politely explain your situation. If you have a valid reason, they may be willing to help you out. If this is your first time overdrafting most banks will show grace and reverse the charges. If you have overdrafted before they can still show mercy and reverse one or two of the fees or even completely reverse them all, do not count on that though. Banks have the power to reverse overdraft fees and in tough times they may be more willing to help their loyal customers, so ask and be proactive on reversing your overdraft fees.
Saving your money might help lower your stress level and help you sleep at night, but it sure won’t make you rich or even close to wealthy. The interest rates of very low risk investments such as CD’s (certificates of deposit) and money market funds, are almost too low to make anything from. You should not expect to make a bundle from your emergency savings account and even now, interest on a $1,000 investment in a one year CD will hardly pay for a movie ticket, a coffee from Starbucks or a dinner at your local family restaurant.
Bank of America is at it again with a new offer for opening a new MyAccess Checking account. This is a special limited-time offer to all of the bank’s credit card customers. By signing up for the MyAccess Checking account you will receive a $75 bonus.
This week CD yield averages for 3 month, 6 month and 12 month CDs have hit yet another record low. And it does not get much better for the longer term accounts.
