$19 Billion In Overdraft Fees
Overdraft fees have morphed into a big money-maker for banks. Kiplinger’s recently reported that lenders collected more than $19 billion this year, up 85% from 2004. Banks charge as much as $35 for a check, ATM withdrawal or debit purchase when funds to cover them are lacking, even if it’s a $2 cup of coffee that puts a customer into overdraft territory.
Recently, my wife was charged a $20 overdraft fee, because her paycheck, which was supposed to be direct-deposited into her account, didn’t go through. She over drafted by 18 cents!
The sharp increase in total fees is largely due to two factors: The increasing use of debit cards and the fact that many banks automatically enroll customers in overdraft programs without them knowing about it.
My advice, beyond obviously avoiding spending more money than you can cover in your account is this: 1. Make sure you understand your bank’s overdraft policy. 2. If you are charged an overdraft fee, ask your bank to refund it. When my wife deposited her check, and explained the situation, her account was refunded the $20 overdraft fee.
Written by Clint · October 16, 2007 · Filed Under Fees, Money 101
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