USA Today exposes bank overdraft fee scheme
August 4, 2008 | Uncategorized | Comments (2)Did you know if you use your debit card you may get an overdraft charge at the time of your purchase if the money is not in your account? Although debit purchases take a few days to clear, some banks won’t give you time to deposit funds, they hit you right away with charges. From USA Today’s story:
Here’s how it works: If you pay with your debit card, some banks will now charge you a fee — $35 or more — if you don’t have funds in your account at the time you sign for the purchase.
Previously, you didn’t get charged this fee unless you were short of cash when the signature debit transaction cleared a few days later. That meant that, while the signature debit transaction was pending, consumers could often deposit money to cover any potential overdraft. (By contrast, PIN transactions typically clear immediately.)
Comments»
That’s ridiculous! That has happened to me before, but what does this have to do with payday lending? If that was going to happen to me again, I certainly wouldn’t go to a payday lender. That would just make things much worse. Who knows when I’d finally get out of that mess!
While I’m sure payday lenders will miss your business, Sam, millions of others will use the service to avoid costly bank fees such as overdraft protection. Isn’t it great to live in a free country where people can choose any financial service they want?