Bankrate has an extensive article on “courtesy overdraft” services tied to debit cards. These services prevent your debit card transactions from being denied, but have the unpleasant effect of charging you anywhere from $20-$35 for this “courtesy.”
Love your site and visit it daily. Here is a story of a recent Executive Carpet bomb. Just thought you would like the other readers to see that these actually work….
Overdrafting makes the Consumerist very sad, and banks very happy.
New Bill Would Require Banks To Warn You If Your ATM Or Debit Transaction Will Result In An Overdraft Fee
If you perform an ATM or debit card transaction that results in your account being overdrafted, many banks will now simply authorize the transaction and slap you with an overdraft fee. A new bill, HR946, would “require banks to give consumers a chance to back out of transactions that might cause them to overdraw their checking accounts,” according to the Kansas City Star.
US PIRG blog tells us, “Chairwoman Carolyn Maloney (D-NY) of the House Subcommittee on Financial Institutions and Consumer Credit is holding a hearing today on unfair bank overdraft fees and their impact on consumers, especially in regard to debit card transactions.” Chairwoman Maloney has introduced a bill that addresses overly-punitive fees that are often assessed when a consumer buys a small amount on a debit card. As US PIRG points out, “It’s much easier to overdraw your (debit) account. A debit card gives you a latte if you have no money. A latte costs $5 but the bank gets a $30 overdraft.”
5,300 Electric Orange Checking Account Holders Mistakenly Told: "Based On Your Credit Score, We Have Decided To Close Your Account"
Nick was shocked to receive an email from ING telling him that his Electric Orange checking account would be closed because of his credit score. Nick was not the only one; similar letters were sent to 5,300 account holders.
Reader Steve J writes:
A long time BofA account holder who enjoys living dangerously with his balance, I’ve had my pocket picked to the tune of $300-400 with this artful setup. It’s rather simple. If you have multiple transactions in a same day they process the largest dollar amount first. This means that if you overdraw your account on a day where you have a particularly large transactions, you end up paying the maximum overdraft fee allowed by math. A numerical example to illustrate:
Though no representative of Bank of America will tell me what exact times each transaction occurred, they assured me that they know that the bad one came first, and that even though they have no specific record of it, they can assure me that I had a negative balance… for an undetermined period of time.
Cutting it close is user error, for sure, but we can remember (imagine?) a time when banks used to cover for a person when paychecks crossed the finish line just behind a check for eighty-nine cents. (We have a thing for those little brown coconut donuts.)