Opting Out: How to Avoid Dreaded Overdraft Fees |
By Sybria White on November 23, 2010
.jpg.aspx?width=75&height=75) Opt out is a term that is used quite often in everyday language and in a number of ways. You can opt out of almost anything, these days. You can opt out of receiving annoying emails from a company you have no intentions of joining. You can opt out having your hospitals records shared with certain people. And now, for certain banks, you can opt out of receiving overdraft fees.
How many times have you made a tiny purchase, sure that you had the funds, only to find out hours later that you do not have that money tucked away? Another instance of overdraft you may have experienced, is when you have carefully calculated the precise moment your direct deposit comes becomes available to spend, yet something with payroll goes wrong. Or perhaps, the gas station you visited ages ago, in the middle of nowhere, finally decides to take of 40 big ones out of your account, right after you make a large purchase at the market. In any one of these situations you would typically be slammed with a hefty overdraft fee. What’s one way to avoid this headache? The answer is opting out of overdraft fees.
Here is how it works
Opting out of overdraft fees means that “transactions will be denied at the register if customers don't have enough money in their accounts to cover a purchase”1. This new option is largely due to changes in recent legislation to crack down on banks. “Banks are now prohibited from automatically adding new customers to overdraft protection programs”2. This law took effect on July 1st this year2. “The latest Federal Reserve now requires banks to drop overdraft protection service for existing customers who never asked for it”1. This means that several banks such as Bank of America will no longer charge overdraft fees when a customer's account is overdrawn by less than $10 in one day. Unfortunately, customers will still be responsible for a fee on the amount of $35 if the account isn’t balanced within 5 days1.
Traditionally, the best way to avoid overdraft fees is to keep an eye on your account, on a consistent basis. However, opting out, thanks to new laws is an additional option.
Sources:
1 http://www.huffingtonpost.com/2009/09/22/bank-of-america-backpedal_n_295526.html
2 http://www.huffingtonpost.com/2010/08/16/overdraft-protection-expi_n_682825.html
|
Current Rating: 0 (0 ratings)