Partner With Your Bank, CU to Lower Fees

Partner With Your Bank, CU to Lower Fees

We have been reporting extensively on the financial disadvantage some people find themselves in when they opt-in to overdraft protection on debit card and ATM transactions. Now we’d like to discuss how to avoid those pitfalls. As we said last week, it is “buyer-beware”. You are responsible for what you sign …but that doesn’t mean you’re stuck. Make your bank and/or credit union your financial partner.

Opting-Out is Still an Option:

If you previously opted-in with your financial institution, talk with them about what that means. It’s okay to change your mind. The opt-in form is generally a non-contractual permission slip. Now simply tell them you’d like to rescind that permission. It’s that simple.

Courtesy is a 2-Way Street:

Many banks and credit unions  call overdraft protection a courtesy, and it can be.  After all, nobody wants to be embarrassed by having their card declined at the check-out. The bank/credit union will do you the courtesy of letting you overdraft your  account. In return you will do them the courtesy of paying the $20—$30 fee associated with the transaction.

In most cases, it is much more prudent to be aware of how much you have available and stay within your means. In the rare instance that that’s  not possible, you could find a $30 courtesy charge on your account because you overspent by one dollar at the grocery store. If you still don’t know you’re overdrawn, you could theoretically continue swiping your card. At $30 bucks a pop, the fees can rack up quickly if you’re not careful.

Another Little Known Fact:

In that scenario, the customer is still unaware of the overdrawn account. Other fees could come in to play as well. Noted on the same form that you opt-in or out on, the financial institution also specified any other fees you could incur. There could be a per day fee for each day the account is overdrawn. Do you remember what the form that you signed said? There may be no limit on the total fees that can be charged for overdrawing your account, but they were all spelled out on that form. You may want to double check if you don’t remember.

Keep Track of How Much $ You Have:

This sounds simple enough, but there are a surprising number of factors that can be overlooked. Forgetting to log an ATM withdrawal; not knowing when an automatic withdrawal is deducted; forgetting to record fees are prime examples. It gets even more complicated if you have a joint account with more than one person making transactions.

Record all of your transactions (even automatic bill pays) and review your monthly statements when they come in. That way your chances are pretty good that you won’t need overdraft protection.

Ask about linking accounts:

Opting out isn’t for everyone. Perhaps  you can’t stand the thought of having your debit or ATM card declined at the check-out. Or maybe you don’t know exactly when you’ll be making your next deposit. Don’t use overdraft protection as a payday loan, there are other options.

You can link a savings account to your checking.  Any overdraft amount will automatically come out of the linked account. There may still be a fee for the transaction but it will be far less. Some institutions have credit cards and/or lines of credit that can also be linked and used for this purpose. The key is to discuss your options openly with your financial institution. Make them your partner.

We can’t stress this enough: in just six months in 2010, consumers saved an average of $450 by simply opting out  of overdraft courtesy protection (JRN 30:23, 31:04). In the end, though, the choice is yours.