Are Bank Overdraft Fees Getting Worse?

By: Bob

Many of us have noticed the trend of bank overdraft fees steadily increasing over the past few years. A bounced check used to cost around $10 but now is more commonly around $35 per transaction. There are overdraft protection plans which only help us build up more and more debt. So what can be done? Many think that the banks should notify consumers of a transaction that is about to cause an overdraft before the transaction can be completed. Banks say that it is just too technically difficult.
Banks are viewed as institutions provided to us solely to protect our money. In fact, they are a business and aim to turn a profit at some point. Banks are now being accused of processing large transactions first so that all those little ones trickling in can each incur its own overdraft fee. It has become easier than ever for consumers to rack up hefty fees now that we are using not only checks, but we're also taking ATM withdrawals, using debit cards, making credit purchases and other electronic payments such as bills and automatic withdrawals.

Banks still hold firm that only the consumer can actually know what checks they have outstanding and what transactions they've made that haven't cleared yet. Maybe they're right. We have to take some responsibility for knowing what funds we have available in our own accounts. Modern conveniences such as check cards and ATM machines need to be taken as seriously as writing a check used to be. If you don't keep record, then you have to expect at some point, you'll be paying a fee.

Besides the increase in the amount, if you feel that you are paying more fees now than you were in years past, you may be right. Most banks now engage in the practice of "courtesy overdraft". Even if you didn't sign up for any overdraft protection, banks may still approve transactions over the amount that you have in your account and then charge you an exorbitant fee for the convenience. Banks say that it actually costs you the same as an old bounced check plus the merchant's fee, minus the hassle for you and the business. What may not sit right is that courtesy overdraft is also available on debit or credit purchases as well as ATM transactions, where the bank knows that you don't have enough money to cover it. Again, the bank needs to make money to continue to provide all of its services and be profitable.

To eliminate future charges, we're just going to have to learn to keep track of our many transactions. Ask your bank about other options that may be cheaper than paying overdraft charges. Most will waive fees for first-time offenders and offer decent overdraft protection plans or a transfer from savings in the event of a miscalculation on your part. If you know you're going to need to overdraw your account and don't want the fee, sometimes a is a faster cheaper way to go.

Banking
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