Avoiding Overdraft Fees(Article)
Posted by admin on November 9th, 2009
Here is a sobering fact. This year alone, banks stand to collect $38.5 billion in overdraft fees. Moreover, next year they stand to make more. Now, just ask yourself how many times have you had an overdraft fee this year? It might not be pretty. Ironically, it’s no surprise that banks have reaped billions of profit on overdraft fees year after year since it all started with the introduction and increasing popularity of the debit card.
We are a nation resistant to change unless, of course, the change makes life easier. And debit cards have definitely made life easier. In fact, debit card use has risen to 58% above credit card use. This shows that debit is becoming the preferred method to use for purchases. And, to get consumers to use debit cards even more, banks dangle reward incentives. But, it is the debit card that could bankrupt us.
Debit is kind of tricky especially when it’s used as a credit card purchase. Whereas debit purchases are immediately taken out, credit purchases can take between two or three days to clear. It can also become a hindrance if you are trying to manage your money on a budget. For instance, if you take a look at your bank account online before you decide to make some purchases. You have some money, but not much if you live paycheck to paycheck, and think that you can get away with it.
However, what you may not realize, is that a purchase from two days earlier that still hasn’t posted. So you make the new purchases and now your account has gone into the red. On top of that, you also now owe “courtesy fees”, otherwise known as overdraft fees.
The best way to eliminate and avoid overdraft fees is to start carrying a notepad to start writing down all purchases. Also, many banks and financial institutions offer alerts that email you when your account goes beyond a certain amount.
Arming yourself of these useful technical features is the best way to avoid and virtually eliminate those overdraft fees. In the end it’s your responsibility to manage your own money. That is until banks figure out how to charge for that.
We are a nation resistant to change unless, of course, the change makes life easier. And debit cards have definitely made life easier. In fact, debit card use has risen to 58% above credit card use. This shows that debit is becoming the preferred method to use for purchases. And, to get consumers to use debit cards even more, banks dangle reward incentives. But, it is the debit card that could bankrupt us.
Debit is kind of tricky especially when it’s used as a credit card purchase. Whereas debit purchases are immediately taken out, credit purchases can take between two or three days to clear. It can also become a hindrance if you are trying to manage your money on a budget. For instance, if you take a look at your bank account online before you decide to make some purchases. You have some money, but not much if you live paycheck to paycheck, and think that you can get away with it.
However, what you may not realize, is that a purchase from two days earlier that still hasn’t posted. So you make the new purchases and now your account has gone into the red. On top of that, you also now owe “courtesy fees”, otherwise known as overdraft fees.
The best way to eliminate and avoid overdraft fees is to start carrying a notepad to start writing down all purchases. Also, many banks and financial institutions offer alerts that email you when your account goes beyond a certain amount.
Arming yourself of these useful technical features is the best way to avoid and virtually eliminate those overdraft fees. In the end it’s your responsibility to manage your own money. That is until banks figure out how to charge for that.
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