Your most costly banking mistake
If you've opted in to get costly overdraft protection, you might want to rethink that decision.
This post comes from Matt Brownell at partner site Credit.com.
There's nothing more expensive than spending money you don't have. That, of course, is a lesson you might learn the hard way if you carry a balance on a high-interest credit card. But spending beyond your means can be a pricey proposition even with a debit card.
Bankrate.com has released its annual checking survey, assessing the fees charged for various services associated with checking accounts.
Perhaps the most notable finding was that only 39% of banks offer totally free checking with no minimum balance requirements, down from 45% in 2011. (With that said, customers have become adept at finding ways to get their checking services for free, with 59% of Americans recently reporting that they pay nothing for their checking account.)
But in addition to those findings, the checking account survey contained a good reminder to banking customers: The costliest thing you can do with your checking account is to overdraft your account while signed up for overdraft protection.
Sure, your wallet can suffer death by a thousand cuts if you are charged monthly maintenance fees (which average $5.48 a month, up 25% over last year, according to Bankrate) or use out-of-network ATMs ($2.50 to the ATM owner and $1.57 to your own bank, on average). But the biggest single fee remains the dreaded insufficient funds (NSF) fee, which now averages $31.26.
A new study (.pdf file) by Moebs Services found that bank revenue from overdraft fees increased 2.1% to $31.5 billion for the year ending June 30, up from $30.8 billion the previous year. The $700 million bump came from a 3.6% increase in price and a 1.4% decrease in the number of overdrafts.
The category of fee includes both bounced checks and overdraft protection on your debit card, but the take-away is the same: If you try to spend money you don't have, your already meager balance will get hit hard. At Bank of America, for instance, bouncing a check or requiring the use of overdraft protection will each cost you $35.
The good news is that you have to opt in to get the costly overdraft protection service (unless it's a store credit card), so if you're charged such a fee it's because you chose the sting of the fee over the embarrassment of having your debit card turned down.
Still, with consumers expressing confusion over their bank's fee structures and banks ordering transactions in such a way as to maximize their collection of such fees, people continue to get hit with the mother of all fees.
More on Credit.com and MSN Money:
MORE ON MSN MONEY
VIDEO ON MSN MONEY
Keep the checkbook register current. Don't guesstimate that you have enough money in there.
I am not believing....PAYING FOR "OVERDRAFT PROTECTION"
You can't argue with this......if you have $100 in your account and write checks for $110, you have broken the law if you do it knowingly.
Now, everyone makes a 1+1=3 type mistake every now and then. That is why I do the math twice and have a mini-calculator. My account also reads -0- balance when I have $100 in it.....that's my overdraft protection.
Being a 'responsible for my own actions' kinda guy...I realize that the convenience of swiping a debit card comes with the responsibilty to track my balances.
I can empathise with what happens when mistakes are made. I made a deposit at a teller. She entered the wrong acct. #, and bounced 6 bill checks because I missed the mistake. EVERYBODY piles on bounced check fees!!!! If I remember, I accumulated about $400 in fees and a $100 penalty for the IRS check!
Fortunately,,,B of A covered all the fees and the penalty...and wrote an apology letter..I thought that was nice since I was at least partially responsible for missing the mistake, too.
As sure as I'm sitting here, a lot of people out there look at "overdraft protection" as a loan based on future deposits.....it's called living beyond your means.
I wish the bozos in the video and author of the article would listen to Suzy Orman rather than telling the masses it is the bank's fault customers aren't responsible and don't research the REAL costs of bank services.
Everyone bitches about fees for services.....DON'T USE THE SERVICE.
It is obvious that A LOT of people could use training in finances. Necessity...mother of invention.
My heart aches for the posters who are obviously struggling and trying to do their best.
Then I read posts which demonstrate the poster sees him/herself as a victim with no responsibility for their own actions.
The resources for learning prudent financial behavior are all over the place....it requires commitment and discipline...which seem to be in short supply...that's what makes it hard.
If I can do it, Y'all can. I so wish I could come up with a pill that would give people the drive to see opportunities and succeed, rather than stumble over roadblocks and give up.
I grew up in a family of 10. My father was a govt. worker making $5,800 per year up to $13,000 when I turned 18. Mom stayed at home (obviously). They both grew up in the depression and sacrificed 5 years of life to WWII. They taught me to work hard and persevere. I began working at 8 years old. By 16, had to pay taxes because Dad claimed me and I made enough to owe with no deductions. I spent 20 years, retired from the military, worked part-time whenever possible. Graduated from high scool 3.8GPA. Graduated college 4.0 Summa Cum Laude...Completed all my college work IN THE MILITARY.
And you know what? Life was NOT a back-breaking drag. I loved every single minute (except when Mom made me eat liver).
Yes, today I have a 7 figure net worth (millionaire)...and live within a budget. My military retirement covers my monthly expenses. I wear sweats or t-shirt, buejeans and tennis shoes 24-7. I drive a 1994 Ford Ranger ( I love my AMERICAN truck.). Don't want a new one, it is not fully depreciated.
I consider my relationships with people to be the most rewarding part of my life. Most who know me have no clue about my worth...I like it that way. Nothing is better than to be of service to other people.
I realize in this day and age, I'm kind of a "queer duck" How'd ya' like my pic in drag? Okay, Halloween costume alright?
Financial condition is a fact of life....not a state of mind. Getting to a goal is pointless if you don't enjoy the journey.
I like to see the best in people.....even Republicans! :)
Why don't we address the REAL problem?
Wages for 60+% of American households are going down, and people can't cut their expenses fast enough when unexpected life happens. It's even worse when a person's pay is commission based.
Just to name a few of life's unexpected moments.
Not to mention the previous credit limits have been squeezed to a fraction of what they used to be.
The Media likes to talk and complain about high tax rates, but fees are a MUCH larger problem for a majority of American families. The Government isn't "fleecing" America, private, under regulated companies are. We should be watching the money changers, not the tax man.
There is another option: move your money
a credit union, community bank or online bank – that offers totally free checking with no requirements to qualify. Bankrate found that 72 percent of the largest credit unions still offer free checking.
So what do you call the government who has mismanaged america's money to the tune of 3 trillion dollar deficit. If that's not poor money managment and a bad example of how to manage money, I don't know what is!
So stop preaching to everyday people, MSN morons, preach to the politicians!
To the Public:
Just take a look at the tricks the Banks are using....First.. Make Payroll Checks obsolete so Joe Public must have a bank account.. Second.. Make excuses to hold money in accounts to make Joe Public overdraft their account... Third .... Use the Law to drain any account that does not stay active to remove all options to Joe Public... Banks Win Joe Public Loses....
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