The Most Costly Mistake You Can Make With Your Bank Account

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Bank mistakesBy Matt Brownell

There's nothing more expensive than spending money you don't have. That, of course, is a lesson you might learn the hard way if you carry a balance on a high-interest credit card. But spending beyond your means can be a pricey proposition even with a debit card.

Bankrate.com released its annual checking survey Monday, assessing the fees charged for various services associated with checking accounts. Perhaps the most notable finding was that only 39% of banks offer totally free checking with no minimum balance requirements, down from 45% in 2011. (With that said, customers have become adept at finding ways to get their checking services for free checking, with 59% of Americans recently reporting that they pay nothing for their checking account.)

But in addition to those findings, the checking account survey contained a good reminder to banking customers: The costliest thing you can do with your checking account is to overdraft your account while signed up for overdraft protection.

Sure, your wallet can suffer death by a thousand cuts if you get charged for monthly maintenance fees (which average $5.48 a month, up 25% over last year, according to Bankrate) or use out-of-network ATMs ($2.50 to the ATM owner and $1.57 to your own bank, on average). But the biggest single fee remains the dreaded nonsufficient funds (NSF) fee, which now averages $31.26.

A new study by Moebs Services found that "overdrafts made a strong comeback," increasing 2.1 percent to $31.5 billion for the year ending June 30, 2012, from $30.8 billion in June 30, 2011. The $700 million bump up came from an increase in price and a decrease in the number of overdrafts.

The category of fee includes both bounced checks and overdraft protection on your debit card, but the takeaway is the same: If you try to spend money you don't have, your already meager balance will get hit hard. At Bank of America, for instance, bouncing a check or requiring the use of overdraft protection will each cost you $35.

The good news is that you'll need to opt in to the costly overdraft protection service (unless it's a store credit card), so if you're charged such a fee it's because you chose the sting of the fee over the embarrassment of having your debit card turned down. Still, with consumers expressing confusion over their banks' fee structures and banks ordering transactions in such a way as to maximize their collection of such fees, people continue to get hit with the mother of all fees.



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19 Comments

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dollibug

OMG.....this is an interesting article....NOW IF ONLY THE WASHINGTON LEADERS WOULD ALSO READ IT....and then read it again and again....UNTIL IT SINKS IN........everyone who is sitting in WASHINGTON deciding on what to vote YES on and NO on....should be made to read this......you think any of them might understand it???????????????????????????????????????????????????????????????????

September 30 2012 at 3:01 PM Report abuse rate up rate down Reply
Billy Milam

I agree. The banks are taking advantage of its customers.

September 30 2012 at 2:04 PM Report abuse rate up rate down Reply
joejoegolfn

Someone needs to send this to the federal government. They could use the education on spending within your means

September 30 2012 at 12:26 PM Report abuse +1 rate up rate down Reply
philboxer

Holy cr*p, Batman! Over 30 BILLION? That figures to over $150.00 per adult per year.

I guess everyone should have payed attention in math class.

September 30 2012 at 1:18 AM Report abuse rate up rate down Reply
philboxer

Holy cr*p , Batman! Over 30 BILLION dollars a year in overdraft fees? That figures to around to around $150.00 for every adult in the US.

Guess everyone should have stayed awake in math class. It's really not that difficult, folks. Leave a little extra money hidden in you account, AND SUBTRACT YOUR PURCHASES! I have never had an overdraft fee in my life.

September 30 2012 at 1:15 AM Report abuse rate up rate down Reply
Curtis

Regions Bank charges 35.00 for a return, and 35.00 for paying for an item when there is no money to pay it. They also charge 35.00 if someone bounces a check to you. The worst thing is, they arrange the debits so that the most possible things hit the balance below zero, allowing them to charge you the 35.00 multiple times. I learned my lesson a long time ago with those guys, and will never use them again.

September 29 2012 at 10:16 PM Report abuse +1 rate up rate down Reply
straveler222

never ever sign up for overdrat protection, refuse it like the plague and if you have more than one account, make sure they do not stick a share program on them, they charge you to transfer your own money from one account to another, usually $35, what a rip off, tell them if there are no funds, to bounce it, then call w2ho ever you wrote it to as soon as you find out and ask them to work with you, 99 times out of a hundred it will end up costing you nothing for an honest mistake. Banks as a whole suck big time, be sure you know how much is in your account every single day, never ever pay for a personnal checking account, real banks have free checking for house holds, it they want you to pay for it, they are crooks. Stories like this one are meant to galvanize us in to believeing this is normal and we should expect to pay these fees, not so, refuse, go to a small bank or a credit Union where they appreciate your business, but still do not allow them to stick you with overdraft protection or sharing. Banks as a whole are a necessary evil, protect yourself, they are not here to help you, they are here to get your money one way or another.

September 29 2012 at 5:45 PM Report abuse rate up rate down Reply
griffin3462

don't run so skinny. leave an extra $1500.00 in checking, pay credit cards in full the day of billing, for a one month cushion. escrow all your yearly bills like real estate taxes and insurance.Stop blaming others for your bad management. Running on empty is bound to leave you at the side of the road eventually.

September 29 2012 at 1:14 PM Report abuse +3 rate up rate down Reply
mn4470

I agree with the above concerning overdraft and insufficient find protection. However, I believe that there is an answer to these customer abuses; take your money out of the bank.
My bank, a credit union, is giving me .50% on my savings account, which essentiall means that they can use my money to make money for them selves and give me almost nothing in return. I we all pulled our money out of the banks, leaving enough to get checking accounts, the banks would change their tunes as far as punishing their customers with abusive fees and fines. THINK ABOUT IT ! ! !

September 29 2012 at 12:24 PM Report abuse +1 rate up rate down Reply
mn4470

I agree with the above concerning overdraft and insufficient find protection. However, I believe that there is an answer to these customer abuses; take your money out of the bank.
My bank, a credit union, is giving me .50% on my savings account, which essentiall means that they can use my money to make money for them selves and give me almost nothing in return. I we all pulled our money out of the banks, leaving enough to get checking accounts, the banks would change their tunes as far as punishing their customers with abusive fees and fines. THINK ABOUT IT ! ! !

September 29 2012 at 11:54 AM Report abuse rate up rate down Reply