Big Banks Revise Debit Card Fees, But Does It Help?
Big banks don't like to be told what to. So with the news that federal regulators are considering legislation to control overdraft fees, a couple of the financial companies took matters into their own hands.
Bank of America and JPMorgan Chase recently announced that they would reduce the maximum number of overdraft fees - the outrageous penalties banks charge when you overdraw with your debit card - that a customer can incur in a day. Even better, they'll make it easier for customers to choose whether to opt in to the overdraft protection program. Currently, bank customers are automatically enrolled and aren't allowed out except in very special circumstances.
But how much of a difference will it really make? It depends.
In the old days (well, about a decade ago) banks would simply deny your transaction when you didn't have enough in your account to cover it. You didn't get to make your purchase, and they didn't charge any fees. No harm, no foul, right? But banks are crafty creatures and eventually they caught wind of the potential for profits. They'd "protect" you by covering the difference when you overdrew - and charging you for it.
If your bank is on board with the opt-in program, it's kind of like returning to the original scenario - no money, no charge. But keep in mind that banks want your money. There's nothing that says they'll warn you when you're about to overdraw. And though they might not automatically cover your purchase, there's no guarantee they won't charge a fee for overdrawing. Now, if they don't let you out of their overdraft program, realize that you could still face several charges per day. And at sometimes $30-50 per charge regardless of purchase size - equivalent of a 3,500% annual interest rate - those charges will add up fast.
Bottom line? Be aware of how much money is in your account. Keep track of how much you're spending. If you frequently find yourself overdrawing, address the root of the problem. For many people nowadays, it's their debt burden. Eliminating that debt will stop the accrual of interest and make all that money you're paying to creditors available to you and your family. Bankruptcy can be the most effective way to do it.
Worried your debt is too out-of-control to handle on your own? Don't let that be your excuse! Help is available. When you sign up for our free one-on-one debt analysis, for instance, our Chicago bankruptcy lawyers can identify the bankruptcy plan that's best for you and address your questions and concerns - at no charge and no obligation. Why trust big banks to help you when you can help yourself today?