Monday, October 27, 2014

Money Monday

DID YOU KNOW: That by simply NOT "Opting In" to overdraft services on a checking account could save a consumer hundreds of dollars every year on costly over draft fees. 

Now is about the time that many will be wondering what in the heck I am talking about. So here's a short explanation. I will start with the basics.

An overdraft occurs when more money is spent than the available amount of the account. Overdrafts most commonly occur when a check has not cleared and a funds from the account are spent. Overdrafts can also occur when debit card transactions have not been cleared or electronic payments are charged to the account and there's not enough funds in the account. Usually what happens in the above situations, the bank will pay the amount the account holder owes to the business, and then charges the account holder a fee for covering the insufficient amount. Fee's are assessed  until enough money  is deposited into the account  to give the account a positive balance.

A few years back, many debit card transactions were being authorized even when the account holder had no funds. Individuals were charged multiple overdraft fees in a single day depending on how much they overspent. Funds were being held for long periods of time and were not made available within a reasonable time period, causing more overdraft fees. Consumers were not given the option to have their debit card decline at the point of sale, which was unfair to the consumer. These practices made it very difficult for the consumer to understand how to maintain their accounts. In 2009 a rule was passed that prohibits financial institutions from assessing fees for paying ATM and one-time debit card transactions that overdraw consumer accounts unless the consumer consents (Opts-In).

Every account holder is automatically "Opted out" and debit card transactions will be declined if the account has insufficient funds.  There is a few instances when debit card transactions will be authorized with insufficient funds, like when paying at the pump and it only authorizes $1. However, overdraft fees will not be assessed and an small amount of interest will be charged to the account instead. See, you just saved yourself $25 bucks because your opted out. So if your opted in and are not signed up for an overdraft protection program OPT OUT! Here's a couple of links where I found my information, to read, if your ambitions  and want to know more about Regulation E. Here and Here.

NOW YOU KNOW, how to avoid costly fees. Until next time... Happy Savings Y'all. Please spread the love, get the word out about my blog and share my posts on your social media sites.
Disclaimer: The opinions in this post are solely mine and are not influenced by any other source.

37 comments:

  1. Interesting! Here, you have to opt in for overdraft and the one I have is $5 per month if I DO overdraft (if not, no charge at all). I like it that way, because if I were to have a bill come out and not go through because there's not enough money, I get charged something ridiculous like $40 for a non-sufficient funds fee. I hate banks, lol!

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    1. Not all banks are bad. I have the same option as you. Talk to your bank about the Regulation E "opt in" and see if they will allow you to still have your overdraft protection while being opted out. Mine did and now I will not get charged any overdraft fees for ATM or Debit card transactions. Most banks will let you because they would rather be on the safe side.

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  2. I have the option for an overdraft, but it's not something I'll ever get I don't think as I'm too cautious to get into debt! Great post though!

    Katie <3

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  3. I'm dreading the time where I have to pay for a bank account. I used to work at one until I moved to California, so I'm still reaping the benefits of a staff (free) account.

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    1. That's so nice, With the way banks are being regulated now days I bet you could find a free checking somewhere, especially at a local bank.

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  4. I don't think I have to option for an overdraft. That is an interesting concept... Wish I had that!

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    1. All financial institutions have to offer this option to their customers. If they don't they are in violation of federal regulation and can be fined a lot of money. Feel free email me with any questions you have I can further explain how overdrafts all work, or any other banking issue at that. astaudte@gmail.com

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  5. That's pretty good information! Great way to save money. I think I have overdraft protection...

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  6. So important to be aware about what your bank charges! We are through a credit union so we have less stipulations. I just added a line of credit to mine because I check my account regularly. In case there's an overdraft it just sits on my line of credit until I pay it off! Which is always as soon as I catch it ;)

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  7. Very interesting information. Never thought about the hidden fees that my bank could charge.

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  8. Interesting! I had no idea that was an option! I will definitely be looking in to this with my bank account(s)! Thanks!

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  9. Great info. Thanks for sharing it.

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  10. Great info! Thanks for posting it!

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  11. Ugh I hate banks! I have been semi-good with my money recently but this info would have been very useful for me a few years ago when I was in college. I remember when I would get so many overdraft fees and that alone was such a struggle!

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  12. I want to say you're lucky that you automatically opted in ther but not sure because here you need a credit check before the bank can give you an OD and if your account is charged and you don't have enough money the bank will decline the charge but then charge you for allowing something to be charged to an account with no money.

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  13. I have overdraft, but I use it and I should just cut it off!!

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  14. Interesting topic! I just never ever use my checking account. Occasionally, I'll pull a bit of cash out here and there, but it's rare in occurrences. I usually rely on my credit card to help me build up credit.

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  15. I'm not sure if my commented post or not.....sorry if it duplicates. Over here in the UK there was a whole thing about bank charges, they used to be able to charge you like £25 for every transaction that bounced - that meant that you could end up £100+ out of the bottom of your account without necessarily even knowing about it.

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  16. oh man. When I was in my early 20's I would over draft all the time and it would be $35 an overdraft. I would look at a meal and be like ok thats this much plus $35 because I was so broke. I had to learn to control my finances the hard way. Im still in my late twenties trying to figure out the art of a credit card because I just don't like having them.

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  17. I had no idea that was an option TBH. I'm pretty sure my account just pulls from my savings if my checking is too low. Luckily I haven't had that problem yet :) *knock on wood*

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  18. Oh, goodness...A few years ago, we got overdrawn from Courtesy Pay. I had no idea our debit card would be approved when we didn't have enough money in the account (to the tune of a large fee). It's a good idea to read the fine print.

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  19. Ooh, great read. I don't think we're enrolled, but it hasn't really been an issue because I am crazy with our budget.

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  20. This is good information to know! I was able to get an account that has overdraft protection but I know that not everyone qualifies for that kind of thing, so it's good info to have out there!

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  21. This was really interesting and I had no idea - I'll be checking my bank information shortly!

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  22. Hmm, I really need to look into this. Thanks for the info

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  23. Great info! We're looking at switching banks so I'll have to keep this in mind!

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  24. These are such great tips! Luckily I have overdraft protection with no monthly fee, which is so convenient. I have never had to sued it yet, but I would not want to pay a fee!

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  25. Over drafting used to be a regular occurrence for me until I opted out. However I sometimes still get the overdraft even when i'm watching my finances because my bank holds so many payments even when it looks like the money has been taken from my account it hasn't. Then all at once they overdraft me. Doesn't happen all the time but it does happen especially when I have automatic payments set up.

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  26. Bank fees add up so quickly. My bank charges $35 for each overdraft AND $5 a day for every day the account stays in overdraft! One misstep and it could cost hundreds. I agree with the opt-out -- buying that latte isn't worth the overdraft charges if you don't have the money.

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  27. We used to live in our overdraft - I can't remember the last time we went in to it thankfully. We keep it though just in case, no monthly fee though which is nice!

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  28. Great information. Knock on wood I have never overdrafted, but I will look into this.

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  29. This is so true! I learned the hard way. Thanks for sharing!

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  30. thanks for the info will take into consideration when I get a bank account again

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  31. Okay this was awesome!!! Thanks so much for sharing.

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  32. Thanks for sharing. I didn't look into things like this when I opened my account, and I really wish I did!

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  33. I learned my lesson years ago with BOA before the new laws were put into place unfortunatelly. Thanks for sharing!

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