Sick of sneaky bank fees and extra charges? Here’s my own personal story on how I deal with these charges.

Tonight after work, I stopped by my neighborhood grocery store and picked up some items for dinner. I got into the checkout line and swiped my debit card with the confidence that comes from knowing I have money in my checking account to cover the purchase. A no brainer, right? Yes, but there have been times when I did not have this confidence because I was buying something at a bad time — either right before payday when I wasn’t sure I would have the money in my account that night (I notoriously don’t balance my checkbook) or when I knew for sure I didn’t have the money in my account, but used my debit card anyway, holding my breath that maybe the charge wouldn’t go through until the following day. I have paid the piper many times by not being careful with my debit card, racking up overdraft fees sometimes as high as $200-$300 a night.

The Trouble With Bank Overdraft Fees

Why I get charged overdraft fees. This is stupid, I know. How difficult can it be to manage your money? I have gotten into more trouble with overdraft charges than I care to admit. I perpetually make mistakes: I don’t balance my checkbook; I misjudge how much money I have in my account; I have the Scarlett O’Hara syndrome (I’ll think about it tomorrow); and I have chronic “busyness.” I am always on the run, I take too much on, and sometimes I forget to think about money and my checking account. There have been many times, particularly when I was in law school, when I could have transferred money into my checking account and prevented overdrafts, but I didn’t have time to think about money, let alone transfer it.

What banks do to vulnerable customers. There is no doubt I am responsible for my money and the overdraft charges I accrue. But banks contribute to my problem as well: They make it easier for me to mess up, and they profit from me when I do. Every night, they send through the highest charge first. That surprises people. But if you have $200 in the bank, and that day you made purchases of $110, $65, $25, $12, and $10 (for example), they will send the $110 purchase through first, causing you two overdrafts on the $12 and $10 purchases.

Had they done it the other way around, sending the smaller purchases through first, you would have only had one overdraft on the $110 purchase. Sneaky huh? I have had multiple discussions with my bank about this, and they claim their customers want the highest purchases to go through first, because they are usually the most important, and they want to make sure those are paid. Huh? Nice excuse! In most cases, the banks are going to honor your transactions anyway (the amount of the purchase and the overdraft charges come out of your next deposit). And I don’t think customers, including me, want more overdraft fees than necessary. At $27-$39 each, they do major damage. More and more banks are now also charging what they call “sustained overdraft” fees, which can be another $30-$35, when the initial overdraft is not paid back within a few days.

How To Escape Bank Overdraft Fees Minus The Overdraft Protection

What can you do about this? Here is a list of things I’ve done to escape the bank overdraft fees:

1. Keep up with your money and use your debit card sparingly.

2. Check your online balance everyday and make sure you know what items are pending to come out that night. If you see you will be short, you can deposit money into your account that day.

3. Make sure you remember what time of the month the charge will hit your account, if you are signing up for something that will be billed monthly.

4. Have a buffer. You can also keep some extra money in your checking account — $200-$300 — to serve as a buffer against forgotten or unexpected debit charges. If you are buying gas or renting a hotel room or rental car, be aware that a hold may be placed on your account for a while, and plan accordingly to avoid getting overdraft fees.

Some recent surveys have shown that people would like to have a choice about whether they get this overdraft protection or not; it would be great for consumers to be notified at the point of purchase that they are about to go into overdraft. The Consumer Federation of America supports the creation of a Consumer Financial Protection Agency to advocate for these kinds of issues. Such an agency would aim to bring a couple of bills to the forefront, which would allow consumers control over overdraft fees and would extend the 36 percent interest rate cap (that armed service members already enjoy) to everyone.

Escape Bank Overdraft Fees Without Overdraft Protection is a post from: Banker, Saver

My first checking account ever was with Wells Fargo. Well, with my first job keeping me busy, I never had a chance to really pay attention to how things were going with my account until I realized that over time, I was accumulating a whole bunch of pesky bank fees that were being charged “under the radar”. Here was the list of fees I was receiving. Do they sound familiar?

How To Avoid Sneaky Bank Fees and Extra Charges On Your Account

1. Minimum Balance Fees.
Some banks will charge you if your bank balance drops below a certain amount. For instance, EverBank will charge you $8.95 a month if your monthly balance falls below $5,000. If you find it hard to maintain a certain balance in your account and you happen to mind these fees, then your best bet is to go with banks that don’t have a “minimum balance required” clause.

2. Ubiquitous ATM Fees.
These ATM fees are everywhere. You use an ATM machine and before you know it, you’re out $1.25 per transaction. But that’s pretty much an awesome deal when you think of the $2 and $3 hits you may get for using the ATMs of certain banks out there (Bank of America, anyone?). If you use these machines abroad, be prepared to pay up to $5 a transaction! Ouch. To cut down on these costs, visit a teller at your local bank office before going on the road!

3. Return Deposit Charges and Stop Payment Fees.
Have you ever written a check for someone only to be told later on that they’ve lost the check? Many banks will stop payment for you at $25 a pop. Sometimes, it’s just not worth resending that check! If something like this ever happens to you and you are faced with the situation of possibly having to cancel a check, ask your bank manager (or the check recipient) if there’s anything that can be done to remedy this situation outside of doing a stop payment. And with regards to return deposit charges, you can easily avoid these by verifying with your bank that there are available funds in place before you go ahead and cash the check you’ve got in your hand.

4. Research and Statement Balancing Fees (Really?)
I never really was aware of this, but banks offer a service to help balance your statements. They typically charge around $20 for such a service. Hmmm…. why not just do it ourselves? You can also use your own budget programs to do this. A desktop program like Quicken or a browser based tool like Mint.com may be able to help you with this task. The takeaway here is that by staying organized, you avoid getting charged those extra fees.

5. Ornery Overdraft Fees.
This is one of the most annoying fees around. When you’re cutting it close — say writing post dated checks — you run the risk of getting slapped with overdraft penalties. Be aware that banks often process larger checks before they do smaller ones, which can ultimately lead to a series of overdraft fees (and not just a single one, since this type of charge often snowballs). That’s not all: such fees often run between $25 to $35 a pop, so be careful! If you do sign up for overdraft protection service, realize that this may also be just another sneaky way for banks to get money from you. You still have to pay for that service after all. Be wary of what’s called the “courtesy overdraft” service. The best way to avoid such fees and services is to stay on top of your bank account as much as possible.

6. Cash Advance Fees.
Have you checked the interest rate on your cash advances lately? Mine has run over 20% the last time I checked my credit card statement! In some other cases, the fee is a percentage of the cash advance you make (e.g. 3% of your cash advance), and not less than $10. If you’re a good credit card customer, you may want to talk to your credit card company or bank about possibly waiving this charge. Or better yet, try NOT making cash advances if you can.

Sneaky Bank Fees: How To Avoid Those Extra Charges is a post from: Banker, Saver