As of August 15, 2010, the banks and credit unions will no longer pay debit and ATM charges if you do not have enough money in your account. Instead the purchase will be declined.  If you want to continue receiving overdraft protection, you must opt-in to your bank’s overdraft plan. Banks and credit unions are beginning to send out notices for opting-in or out now.

If you decide to opt-out, you will be allowed to opt-in later. You can also cancel your opt-in agreement at any time.

Currently, if you have Overdraft Protection, and you use your ATM card to make a purchase or withdraw money and you do not have enough funds in your account, the bank or credit union will allow the purchase to go through, but will charge you an overdraft fee. These fees can be as much as $20-$30 per transaction. If you make several purchases without enough money in your account, the fees can really add up.

The new laws do not cover checks or automatic bill payments. The bank may still automatically enroll you in their standard overdraft service for these types of transactions or they may require that you make a choice to opt-in or out of this service as well. If you do not want the standard overdraft coverage, talk to your bank. Some banks allow cancellation of the coverage and others do not.

Whether you decide to opt-in to debit and ATM overdraft protection, it is important to remember that every dollar you pay in fees is a dollar you lose. It may have gone towards your retirement, vacation, new car, new house, etc. If you are struggling to make ends meet and need help managing your money talk to a certified credit counselor.

The course covers the benefits of working with a mainstream financial institution in order to meet your financial service needs and avoid losing money by using check cashing or payday lending services. In addition, participants will learn how to:

• Find out what information is being stored about you in ChexSystems;
• What to do about negative information in ChexSystems or other bounced check registries;
• How to keep your account balanced and;
• How to keep your account safe.

The CheckWise web based education and tracking system has many advantages for the student. You will enjoy the easy to navigate format and upon completion of CheckWise, you may print a certificate of achievement. Completing this program and any other requirements of a financial institution may help you to open a checking account at participating financial institutions.  You may present the certificate to a bank or credit union in your area or provide the bank or credit union a telephone number which they can call to verify that you completed the course.

Take the next step and learn about the benefits of being a member of a bank or credit union. Visit us online at www.myfinancialgoals.org to learn how to register and pay for this new service.

This year banks are expected to earn $17.5 billion* from overdraft fees. The best way to avoid banking fees is to know your banks policies and, of course, manage your money carefully.

Overdraft protection

Overdraft protection or courtesy overdraft programs at banks are a very common practice. It works like this: a consumer does not have enough money in their account to cover purchases, so the bank pays for the purchase and charges the consumer a fee, anywhere from $17 to $39. Unfortunately, for many people the practice has reduced their bank accounts to a never ending circle of debt repayment. 

Here are some great questions to ask your bank about policies impacting overdraft protection or overdrawn accounts:

1. Posting debits – Ask the bank how they post debits (purchases) to your account. Some banks will post the largest purchases first causing several small purchases to overdraw your account. You will be charged a fee for each item that overdrafts.
2. Posting Credits – Does the bank post credits before they post debits? What time do credits (deposits) have to be received by the bank in order to post to your account the same day?
3. Hold times – Banks will often hold checks before allowing you to use the money. They want to know the money is really there before you use it. Most banks have a hold time on paper checks, but not direct deposit.
4. Daily fee – Does the bank charge fees for everyday that your account is overdrawn?
5. Transfers from savings – Can you link your savings account to your checking account to cover overdrafts? If you can, is there a fee associated with the transaction?
6. Does the bank ever allow an overdraft fee to be waived? If you have never overdrawn the account before, it is a good idea to ask if they will waive it this one time.

No Protection

If you do not have overdraft protection and you cannot pay a check you wrote, the bank will charge you an NSF (non-sufficient funds) fee and so will the people or business to which you wrote the check. In this situation having overdraft protection may help you avoid even higher fees and, in some extreme cases, jail.

Other Fees

In addition to overdraft fees bank accounts may have many other fees associated with them. These include:

1. General fees – Does the bank charge a monthly fee for having the account?
2. Is the monthly fee based on the balance you have in your account?
3. NSF fee – How much is the NSF fee?
4. ATM fees – Do they charge you for using another banks ATM?
5. Online fees – Is there a charge to access your account information online?
6. Bill pay fees – Do they charge for paying bills or transferring money online?
7. Tele-banking fees – Are there fees for calling and requesting banking information?
8. Teller fees – Are there fees for discussing your account with a teller?

Finally, the best way to avoid paying unnecessary fees to your bank or business where you shop is to manage your finances.

• Keep track of your expenses. Use a check register, notebook or electronic spreadsheet to record checks you’ve written, automatic payments, debits, or other fees (ATM, bank, etc.) being subtracted from your account.
• Periodically check your account throughout the month to see if checks and automatic payments have been deducted.
• Review your monthly bank statement and remember to subtract any outstanding debits or checks that are not shown on the statement. Add in any deposits that are not shown.

Shop around when selecting a bank. People tend to feel that the local, home town banks typically charge less fees; that is not always the case. Check out local banks, national banks, and credit unions when trying to find the best deal.

Take the time to ask questions and understand how much the bank will charge you to access your money. In the end the money you save may be the difference between an overdraft charge and a positive account balance.

* Center for Responsible Lending. 2009. Quick Facts on Overdraft Loans. http://www.responsiblelending.org/overdraft-loans/research-analysis/quick-facts-on-overdraft-loans.html (last visited July 28, 2009)

(NAPS)—A new scam is swindling consumers: checks that seem legitimate to both bank employees and consumers, but that are counterfeit and leave unsuspecting consumers footing the bill.

The Federal Trade Commission has a new brochure, “Giving the Bounce to Counterfeit Check Scams,” which explains common angles used in these scams, the responsibilities of banks and consumers when it comes to counterfeit checks, and advice on how to avoid them.

While the angles used by scam artists may vary, the basics of the counterfeit check scam remain the same. The consumer receives a generous check with an explanation that he or she has just won an award, a prize, a lottery or some other windfall. The consumer is instructed to deposit the check and wire a portion back to pay fees, taxes or the like. The consumer deposits the check, the bank credits the funds to the consumer’s account and the consumer wires the money to the sender. Some time later, both the bank and the consumer learn the check was bogus.

Unfortunately, the consumer is out of luck: The money that was wired can’t be retrieved and, by law, the consumer is responsible for the deposited check—even though he or she didn’t know it was fake. The FTC advises consumers not to rely on funds from checks unless they know and trust the person who gave them the check or, better yet, until the bank confirms that the check has cleared. Other tips:

·         Throw away any offer that asks you to pay for a prize or a gift. If it’s free or a gift, you shouldn’t pay for it.

·          Resist the urge to enter foreign lotteries. It’s illegal to play a foreign lottery through the mail or the telephone, and most foreign lottery solicitations are phony.

·         Know who you’re dealing with and never wire money to strangers.

·         If you’re selling something, don’t accept a check for more than the selling price, no matter how tempting the offer or how convincing the story. Ask the buyer to write the check for the correct amount. If the buyer refuses to send the correct amount, return the check. Don’t send the merchandise.

·         If you accept payment by check, ask for a check drawn on a local bank or a bank with a local branch. That way, you can make a personal visit to make sure the check is valid.

·         If the buyer insists that you wire back funds, end the transaction immediately.

·         Resist any pressure to “act now.” If the buyer’s offer is good now, it should be good after the check clears.

To file a complaint and for more information, visit www.ftc.gov.