Over-drafting a checking account is a practice that has become all too common place in our society, especially in an economy that has been on the down turn for several years. This fee can be thought of as a kind of ‘loan’, the banks’ way of saying ‘You bought something that you didn’t have the money for. We’ll cover it, but this is our premium’. This practice saves you from returned items, but at great personal cost to consumers.
Banks would often get out of hand with these kinds of practices. For example, banks had the capability to arrange the order in which transactions would over draw an account, resulting in needless charges for a wide variety of the population. In light of the Dodd-Frank Financial act of 2010, banks now have to offer you the option to participate in an overdraft program at all.
If you opt out, the next time you would overdraft your account your transaction would be cancelled. You would not be able to purchase with money that isn’t truly yours and you would save in avoided overdraft fees. This can be done with any bank, and can simply be accomplished by a call to customer service or a visit to the branch, in most cases.
In light of this, it’s important to know how these changes to the processing and charging of these fees affect your bank and your wallet. Advocacy groups such as the Consumer Financial Protection Bureau have been created to help, but many are still unaware of such polices.
Read more at GOOD.is.