Who’s Holding Your Money?
By Consumers Union on Monday, May 19th, 2008
These days, we’re all trying to make every dollar stretch a little farther. But it doesn’t help when debit holds freeze access to your money for a few days. What’s worse –when you get hit with overdraft fees or NSF (insufficient funds) fees because of debit holds.
Here’s an example of how a debit hold can cause havoc with your finances:
You check your balance on-line and see you have $100 in your checking account. You stop at the gas station, and swipe your debit card at the pump to pay for a $40 tank of gas. With $60 left in your account, you pay for $55 in groceries later in the day with that same debit card.
No problem? Wrong. Because you paid with a debit card at the gas pump, the gas station may have put a $75 “freeze” on your checking funds to pre-authorize your gas purchase. That freeze doesn’t immediately disappear – it can lock up your money for up to three business days.
Meanwhile, you now may be hit with a $35 overdraft fee for those groceries and any other purchases you made on insufficient funds. Recently, federal regulators have proposed putting an end to such overdraft practices. You shouldn’t be hit up with overdraft fees or insufficient funds because of a debit hold. After all, the money is still yours. And, banks shouldn’t allow you to overdraft funds unless you opt-in, or ask, for overdraft protection.
You can let the Feds know how you feel about overdraft practices by visiting www.CreditCardReform.org. Real people’s experiences with the banks and credit card companies prompted The Federal Reserve Board to propose tougher rules. Writing to them now will make sure they happen.
We’d also like to know about your experience paying with your debit card at the pump. Our quick survey will better inform us on how common this practice is. The more we can put the pressure on regulators and lawmakers to give consumers a break, the more good news for our wallets and pocketbooks this summer. After all, it doesn’t look like gas prices will be coming down anytime soon.