New Bank Overdraft Fees Set to Take Effect

Posted on: June 3rd, 2010 by

Financial Planning - Rockville, MDOn July 1, new Federal rules will require banks to ask customers to opt in for overdraft coverage; that line of credit that kicks in when account holders make purchases that exceed their available checking and debit account balances.  To lure customers to their programs, some banks are trimming their overdraft fees.  Currently, such fees average $34 per debit transaction or ATM withdrawal.  However, under the new law, if account holders don’t opt in, banks won’t be able to cover their charges when their account balance falls short.  The charge will simply be declined, and the customer won’t be charged an overdraft fee.   For those of you, however, that want to retain your overdraft protection, but for a small price tag, there are a few simple ways to cut your overdraft charges.

The first is to carry multiple cards.  If you always have 1 or 2 back-up cards and cash on you at all times, you will should never run into a situation where you don’t have the funds to pay for something.  If you are someone who tends to carry borderline balances, this may be a good option for you.

One of the easiest ways to avoid overdraft fees is also probably the most obvious:  balance your checkbook.  Now that account information and statements are available online, it is simple to check your account weekly and review the transactions and balance.  Again, if you are someone who operates on a borderline balance, check your account daily and make a budget for yourself.  Make sure you know exactly what you are spending and that it matches up with what you actually have to spend.

Another easy way to avoid hefty fees, consider linking your checking account to either a savings account or a credit card.  There may be a small fee to do this, usually $5 to $10 if you end up dipping into another account.  The downside is that linked accounts with credit cards carry the potential for getting hit with interest charges.  If, however, you are someone who pays off your balance each month, this can a good option.



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