Don't Let The Bad Economy Get You Down!
Jul 9, 2009 5:53 pm US/Eastern
Banks Pull In $20 Billion In Overdraft Fees
MIAMI (CBS4) ―
It's one of the worst cases of double-dipping and it's coming from some of the biggest banks in the country that have already gotten billions of dollars in public bailouts to stay in business. It's coming from those over-draft fees and extra charges that typically cost $20 - $30 each at a time if you end up spending a little more than you have in your checking account.
Bounce a check and you may end up with a so-called courtesy-loan which covers the over-draft and includes automatic withdrawal out of your savings account. But it also includes extra penalty charges.
Gregg McBride of Bankrate.com warned, "One bank policy that tends to draw the ire of consumers is because it results in more bounced checks is processing checks from largest to smallest, rather than in chronological order. And what this can mean is that you end up overdrawing the account repeatedly on smaller transactions."
According to a recent front page investigation from "USA Today" some of the country's largest banks are intentionally processing your biggest checks and charges first to try and force customers to bounce checks. They're also charging credit card accounts immediately after purchases, rather than waiting for normal "banking clearances" which could take several days to process.
Bounced check fees are now boosting banks' annual profits by more than $38 billion dollars. And that's on top of the extra $20 billion they're making off credit card "overage" fees.
CBS4 Chief Consumer Investigator Al Sunshine found the good news for the rest of us is there are now a growing number of smart phone apps and on-line banking programs we can use anytime to double check our bank accounts and know exactly how much money we have, and how to avoid all the extra charges.
Gregg McBride advised, "Keep adequate tabs on your balance, specifically request a link between your checking account and your savings account that's your lowest cost line of defense, and then also be on the lookout for higher monthly service charges and balance requirements on checking accounts, keeping in mind a free checking account might be your best alternative."
The Obama Administration is already proposing a new consumer-protection office to better regulate financial transactions like credit cards and mortgages and next month, new credit card rules kick in.
Plus, there's already a move in Congress to further regulate the banking industry to force banks to make it easier for you to manage our bills and avoid all their extra charges.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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