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The reason banks want you to keep debit card overdraft coverage

You've a debit card, if you are like most people. If so, you've gotten your letter within the mail from you bank politely asking if you would like to continue enjoying its debit card overdraft coverage. This letter is a result of new credit card rules that require banks to ask you if you would rather opt out of paying for an overdraft and just have your purchase declined. The change in regulations was encouraged by consumer complaints about out of control bank overdraft fees . 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.

Post resource: It's a good idea to opt out of debit card overdraft coverage

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 began scheming about how to blur the distinction between debit and credit cards. Your checking account supplies the funds for your debit card. When you use your debt card and there's no money left, overdraft protection charges a debit card overdraft fee to make the purchase. That's why that cup of coffee at Starbucks ended up costing you $ 40. Getting a pay day loans if you're 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 US

Gelles gives the advice that you should opt out of your bank's overdraft protection "service". Even Bank of The United States thinks that's good advice. In March Bank of The United States announced that it will do away with debit card overdraft coverage. The New York Times reports that lost revenue from debit card overdraft fees could cost B of A tens of millions a year and other banks could feel the pressure to follow suit.

Bank overdraft fees get out of hand

Debit card overdraft fees can effortlessly get out of hand since the offending transactions go unnoticed. Gelles said that because 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. Up to four overdrafts a day, or $ 140, is Wachovia's policy. Citizens Bank will charge up to seven at $ 37 apiece, or $ 259.

Bank overdraft fee prevention


That too lots of people are lousy at balancing their checkbook is a problem highlighted by new credit card rules about bank overdraft fees. To keep 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. Do not forget that an updated check register has a more accurate account balance than an ATM slip.



2.Stay on top of all deposits, receipts and withdrawals in your check register.



3.Know your checking account balance before you make a debit card purchase or ATM withdrawal.



4. Whether you write checks or not, balance your account once a month.



5. Put "ghost" funds inside your checking account. Throw an extra few hundred bucks in there and do not write it within the register. Don't forget to account for the ghost funds whenever you balance your account.



6. Make sure you are aware of the possibilities your bank provides for avoiding potential overdraft situations.



philly.com

nytimes.com

prweb.com