Consumer Alert: How to get rid of overdraft fees!
ROCHESTER, N.Y. – This consumer alert looks at perhaps the second most important marriage in your life. The most important is the marriage with your spouse. And second is probably the marriage with your bank. And while all marriages require compromise, there are some compromises I am unwilling to make when it comes to my bank. One is free checking. The other is overdraft fees. I was inspired to take a look at this issue when I got a call from a viewer last week who bounced a check. He’s on a fixed income – social security and a small pension. He called his bank, telling them when his social security check would be deposited. He asked them to please stop charging the overdraft fee. But they kept charging him a $35 fee every single day. Consumer advocates call that abusive. And while many banks made big news in recent years when they eliminated overdraft fees, a survey just released by Bankrate.com revealed the vast majority of banks are still charging them.
Congress, as well as the Consumer Financial Protection Bureau, have put a lot of pressure on banks to reduce or eliminate overdraft fees and non-sufficient fund fees. Overdraft fees occur when you don’t have enough money in your account to pay the transaction … so the bank pays it and charges you a fee. Non-sufficient fund fees occur when the bank doesn’t pay for the transaction and charges you a fee anyway. There is some good news on that front. The Bankrate study found that the average overdraft fee is down 11 percent from last year to $29.80. But the vast majority of banks are still charging you every time you don’t have enough money to cover the transaction.
“Our survey found 96 percent of accounts still charge an overdraft fee, and 87 percent still charge a non-sufficient funds fee,” said Greg McBride, Chief Financial Analyst with Bankrate.com. “So these fees are not going away anytime soon and consumers are going to have to be very vigilant to make sure that they don’t incur those fees.”
But you have the power to eliminate these fees. You can opt-out of overdraft coverage. You’d rather have your debit card denied than be charged $3 for your $5 latte. Sign up for overdraft protection by linking your savings account to your checking account. Monitor your account closely, divorce your bank, and take your money to an institution that doesn’t charge these fees. Click here for some recommendations from Bankrate.com.
Many big banks like Citibank, Wells Fargo, Capital One, and Bank of America have eliminated or reduced these fees. Another pesky fee to look out for is the out-of-network ATM fee. You can avoid this fee by simply getting more money when you make a purchase at a store. There you can access your money for free.