Sunday, August 16, 2009, AM | 1 Comment
If you were the bank, you would be happy – 4th of July, bells ringing. But you are the consumer. You don’t check your account, you overdraw and the bank charges you $35 for the $5 worth of food. You are debited $40. Some folks don’t realize this.
Imagine if 100,000 people did that in the case of just one bank, that’s $3.5 million for the bank without working any hardship.
While reaping those savings, it now generates billions in fee-based income for the banks.
It used to be debit-card purchases would not go through without sufficient funds in a card holder’s account. Then some opportunistic banks – it has become the norm now – realized that, with direct deposit, they could recoup the overdrawn funds the instant their clients’ next payroll checks rolled in.
Compare debit card with credit card
You can always dispute the charge to your credit card that you believe is fraudulent. Debit-card holders still are not guaranteed those same protections.
Credit-card borrowers are never out more than $50 regardless when they discovered potential fraud.
Debit-card holders liability is limited to $50 only if they report perceived fraud within two days; the liability jumps to a maximum $500 from that point to 60 days, and is completely unlimited thereafter.
In a Nutshell
The banks make a huge profit. The equivalent interest rate for your $5 lapse: 1,000%. That is usury and that ought to be strictly against the law.
However, in the mean time, to avoid the usurious attitude of the banks, make a little effort on your part by checking your account. That will save a lot more than you think, before you buy even a candy.
The law must make this kind of usury against the law. At the very minimum, notify card holders at the moment of transaction that they will be overdrawn and let them decide they want to pay the fee.
The banking regulators must focus on looking out more for the safety and soundness of our modest and small accounts.
I have a debit card that I use only as an ATM card. I never use it to buy anything. Period. I use credit card all the time. However, I make sure that I can pay the amount in full, or at least half, by the due date.Facebook.com/doable.finance