How to Protect Yourself From Overdraft and Bounced Check Fees
Oh, the dreaded overdraft fee…and the bounced check fee…what’s a person to do? What are these pesky little things that end up reeking havoc on your bank account? Well, they’re just a bank’s way of punishing you for not keeping up with your account. Okay then, what exactly are they…and how do they happen?
First of all, a bounced check is a check that is returned to the bank becaemploy of insufficient funds on the check writer’s side. And yes, there are fees associated with processing these “bounced checks”. Depending on the bank and their procedures, this fee probably assessed to the person depositing the check, the person writing the check or both parties.
Although the cost to process these checks are significantly lower for the banking institutions, the typical charge to a consumer ranges from $20-$35 to process each bounced check. Ouch!
Okay, now for the other little charge (pun intended)–the famous overdraft fee. If you haven’t heard of this one yet, take into account yourself lucky. If you have then you know how painful it can be.
An overdraft fee is a fee assessed when your bank lend funds to cover a transaction that overdraws your account.
There is also something called a Non-Sufficient Funds (NSF) fee which occurs when there are not enough funds in your account to cover a transaction.
The fee for processing a NSF transaction ranges from $0 - $35 for each item that overdraws your account. By the way, you can be hit with both a NSF fee and an overdraft fee (go figure).
You intend to to find out how these terrible events occur-right? Okay, here we go!
Overdraft and Bounced-Check Fees may occur when you do one of the four following actions:
- Write a check
- Withdraw money from an ATM
- Make a purchase with your debit card
- Make and electronic payment
When you perform any of the four actions above for more than you have in your account-then you may activate an overdraft. Now, your financial institution has some contemplateing to do-should we pay these items or not?
Well, it all boils down to this: if they pay the overdrafted items, then you’ll be charged an overdraft fee for each item. Did I say EACH item…oh yeah, I did.
The second option your bank has is to return your check and charge you a bounced check or NSF fee. And, don’t forget about the company you wrote the check to. They intend to both their money and the service charge fee that the bank may have charged them for your “rubber check”.
It sounds like being stuck between the proverbial “rock and a hard place” to me. Don’t forget the bank makes this decision to either pay these items or not pay them. You have no say in that matter.
How to protect yourself from these fees:
I can just hear so many of you out there ranting and raving about it being YOUR responsibility to accurately balance you bank account. That is very true and I do not condone being irresponsible in doing just that.
However, let’s face it, things beyond our control can and does happen. And overdrawing your account can be one of them (if it’s not habitual).
Okay, the absolute best way to avoid these fees is to mange your account responsibly! (Okay, see I said it again).
The following is some tips that may assist in facilitating this desire.
- Keep your account register current.
- Pay particular attention to all of you electronic transactions
- Keep track of your automatic bill payments
- Review your account statements
Okay, you’ve done all of this, nonetheless you still crave more protection– just in case. What can I do you ask? Well, you can link your checking account to:
- A savings account with your bank
- An overdraft line of credit with your bank
- A credit card you have with your bank
The costs of these services are significantly lower compared to the cost of bounce check or (NSF) fees. Depending on your bank, and the type of account you have, these fees can range from $0-$15 per episode.
If you intend to to learn about the inherent fees associated with debit card usage, then visit http://www.debitcardtraps.com http://www.debitcardtraps.com for an eBook on tips and advice for avoiding debit card problems. Jessica Harvey writes on solving possible problems that may arise from using various forms of plastic in term of advice, procedures and practice.
