This is a new article that the no good deals readers should know about.
This article is a summary of the Federal Reserve Board’s guide on Protecting Yourself from Overdraft and Bounced-Check Fees.
Overdrafts and Bounced checks happen when you write a check, withdraw money from an ATM, use your debit card to make a purchase, or make an automatic bill payment or other electronic payment for more than the amount in your checking account.
Let us say that you overdraw your account. This is where the bad deal takes place. Your bank has the choice to either pay the amount or not. If it pays even though you don’t have the money in your account, you may be charged an “overdraft” fee. However, if your bank returns your check without paying it, you may still be charge a “bounced-check,” or “non-sufficient funds,” fee. Furthermore, The person or company that you wrote the check to (gas company, rent landlord) may also charge you a “return-check” fee in addition to the above fees. Thus, it is very important that you avoid overdraft or bounced checks. The federal reserve advices the following tips to avoid overdrafts and bounced-check fees:
- Keep track of how much money you have in your checking account.
- Pay special attention to your electronic transactions.
- Don’t forget about the automatic bill payments you have set up (Phone, Utilities bills).
- Review your account statements each month.
- Try to set up a “Courtesy overdraft-protection” with your bank (Don’t use it as short term loans, get money back into your account as soon as possible after a overdraft)
- Link your checking account to a savings account you have with the bank
- Set up an overdraft line of credit with bank
- Link you account to a credit card you have with the bank.
This is for your information.
For more information on Overdraft and bounced check click here.
3 Comments
June 13, 2008 at 5:27 pm
overdraft only kicks in if your “over draft balance” is sufficient enough to cover the amount requested. So it does make sense to have overdraft, what gets charged in interest on the amount used. For example if you have a $20 balance on your checking account and you write a $30 check your overdraft will be charged 10$. Your check gets paid and you avoid a $25 bounced check fee. The interest on the $10 will be about .12 cents. Paying .12 cents is muuuuch better than paying $25 bucks… don’t you agree?
June 13, 2008 at 5:51 pm
Yes. I agree. But, the bottom line is that you have to be on top of overdraft because if it happens repeatedly you still are going to lose. You have to be on top of the automatic payments also. I actually don’t like them. I like to pay it on my own.
June 13, 2008 at 7:23 pm
very true… your right, for those who are unaware or not keeping control of their bank accounts overdraft is just another financial hole.