As overdraft fees hit their highest, a reminder to NOT opt in.
By Consumers Union on Wednesday, January 18th, 2012
In case you needed a reminder to opt-out of costly overdraft programs: The median overdraft fee has reached an all time high of $30 per transaction, up from $27.50 a year ago. Previously we have recommended to consumers that you opt-out of these high-cost short term loan programs. However, if you need some sort of overdraft protection consumers should choose to link to their savings account or a credit card in which case the fees will be considerable cheaper.
This increase will not spread as far as it would have before regulations took effect which prohibit banks from charging such fees unless consumers Opt-In to debit overdraft protection. Despite these protections, banks have intensely marketed their overdraft products to consumers since the law went into effect. In turn many consumers opted into these programs even though there are other less costly ways of covering transactions when there is not enough money in your account. These programs are particularly dangerous since all banks process transactions in different ways, often maximizing the number of fees incurred in a day. Take this as a reminder that you should not Opt-In to debit overdraft protection plans that your bank offers. The worst that could happen is a little embarrassment when your debit swipe is rejected at the point of sale. Better than a $37 cup of coffee!
And if you are just fed up with the fact that these big banks insist on raising a fee that made them $30 billion last year, considering moving your money safely using our tips.