Watch our for overdraft fees on your debit cards -- that's right, debit cards. The New York Times has a great story (and video) showing that increasingly, banks and credit unions are allowing consumers to exceed their checking account balances when they use their debit cards — for a price. We all know banks aren’t in the best shape right now, so they are finding creative ways to collect money --- from you! Debit card fees are a big source of income -- the Times reports: “this year alone, banks are expected to bring in $27 billion by covering overdrafts on checking accounts, typically on debit card purchases or checks that exceed a customer’s balance.”
The Times also offers great tips on how to avoid these fees:
http://www.nytimes.com/2009/09/09/your-money/credit-and-debit-cards/09debitside.html.
Bottom line: if you use debit cards, always check your
balance. Don’t go over your budget! See if you can stop overdraft protection, asking
your financial institution to deny charges when you do not have the money in
your account. If you aren't good at keeping track of what's in your account, see if your bank can send you alerts when your balance gets low. Any way you look at it -- whether with credit OR debit cards -- it is simply not a good idea to
spend money you don’t have…period!
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