By Susan Willis

Logging onto your online bank statement or opening your paper statement and seeing one or more overdraft charges appear on your account can be a very frustrating experience. Each charge can cost up to $35, depending upon the bank. You know that bank fees situation has gotten bad for you if you are afraid to check your statement for fear of seeing yet another charge.

If this describes you, rest assured you are not alone. Your fellow citizens are collectively spoon-feeding banks a whopping $30 billion per year in overdraft fees. Banks have come to depend upon these fees as a source of healthy annual profits.

In fact, the high levels of profitability of so-called overdraft protection programs has a lot of consumer advocacy groups and members of Congress up in arms. Part of the problem is that many banks have admitted to the practice of “transaction stacking.” This is whereby banks carry out transaction processing to produce overdraft charges.

Transaction stacking works like this. Say, for example, that one day you wake up and, seeing that your checking account balance has dwindled to just $30, you decide to just do some very light shopping. So, you go out and make three debit card charges on a given day: one for $5, one for $7, and another for $50 in that order. (You obviously had forgotten how low your balance was once you left the house).

Your bank, practicing transaction stacking, decides to process the $50 charge FIRST even though it was made last among the three. Then, they process the $5 and the $7 charges. That $50 charge immediately sent your balance into the red, making you eligible to pay fees. Due to the order in which they processed the transactions, you end up incurring three overdraft charges at $105 instead of just one charge at $35. Sneaky bank!

If you are wondering, “How can you fight overdraft fees?”, here are 5 strategies that can help:

#1: Keep a “safety pad” of cash in your account at all times:

Always keep at least $100 to $200 in your account as a padding against potential overdrafts. Of course, not everyone is able to swing this, but it is worth shooting for.

#2: Link your main checking account to a savings account containing backup funds:

Most major banks will give you the option to connect your checking account to a savings account with cash in it. That way, if you overdraw your checking account, this backup account will kick in. Be careful, though: some banks will still charge you an overdraft fee (maybe $10 or so) even though you are covering the overdraft with your own money. Ouch. Still, it’s better than paying the usual $35 fee.

#3: Go online each morning to check your balance:

This one is deceptively-simple: go online each morning, without fail, and check your balance. Also, use a calculator to add up all of your pending charges, checks and any planned ATM withdrawals to make sure you are not at risk of overdrawing for the day. Time-consuming, but hey, it works.

#4: Remove yourself from your bank’s overdraft protection program:

An even simpler option is to just ask your bank to remove you from inclusion in their overdraft protection program. The only downside here is that you could find yourself in the embarrassing situation of being turned down at the local restaurant or merchant for non-sufficient funds.

#5: Switch to a no-overdraft-fees bank:

Saving the best for last, you could always leave your bank and their fee-charging ways and find a bank that will never charge you an overdraft fee – even if you overdraw your account. These banks are out there and looking to sign up more customers.

Try these 5 strategies to fight overdraft fees.

About the Author: Find a list of no-overdraft-fee banks in your area at:

No Overdraft Fee Banks

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Source:

isnare.com

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