If you’ve been thinking about opening a new checking account with a bank or credit union, and getting a debit card to go along with it, you should know that, as of today, July 1, 2010, you have a few new options open to you if you try and make a purchase that’s a little out of your current price range.
Specifically, if you try and buy something when your bank account doesn’t have the cash on hand to cover it, you’ll have two options available to you: you can choose to have the bank or credit union front you the money anyway (and be charged a considerable fee for it), or you can just walk away from the purchase.
I want it all
Those fees don’t come cheap either, as I’m sure you can imagine. Typically, a bank’s overdraft fees run from about $30-$40; even if your account is just a couple of bucks shy of the item you’re trying to buy, you could be hit with the entire fee if you absolutely have to have it right then and there. And while you’d think these are pretty straightforward options, and should really help some people curb their spending enthusiasm (I mean really, who’s going to overdraft their account when they can look for their purchases somewhere cheaper or just wait until they can afford it?), it seems some of people will never learn.
According to a poll taken from Credit.com on this issue back in May 48% of those surveyed said they’d consider “opting-in” to this new overdraft protection plan if it meant avoiding the embarrassment of having their card declined when trying to buy something they can’t quite afford.
That’s right, rather than put up with a minute of minor embarrassment at most (seriously, what’s the cashier going to do? Burn your card on the spot and have you physically removed from the premises just because your card wouldn’t go through?), a majority of those who participated in the survey said they’d rather take on their debit cards’ extra fees to get what they want right then and there. Okay, so what can I do to avoid this?Luckily, there are some alternatives available for those of us who would rather not opt-in to such a pricey option:
• Carry more than one card. This is something you should be doing anyway, if you want to keep a good credit score going, but if you don’t want to pay one card’s fees to make a purchase, pay for it with another card. Just make sure it’s either a debit card that won’t charge you any additional fees or a credit card that you’re up to date on.
• Sound the alert. If your current bank offers email or text message alerts with up-to-the-minute information on your account balance, sign up for it. This way, you’ll always know exactly how much money you have to play with, and can avoid those embarrassing “CARD DECLINED” moments.
• Check for more options. See if your bank or credit union will let you tie your savings and checking accounts together as an alternative to being charged an overdraft fee when you come up short. There could still be a fee for this, but it’ll be cheaper than an overdraft charge. Just be sure you don’t run through your savings account on accident.
So what do you think? Are these overdraft options worth the charge? Would you opt in and take the fees to avoid a declined sale and the public humiliation that goes with it? Or will you opt out and hold onto your money? Let us know what you think!
For more advice on all things credit, from credit repair to debt relief, call a specialist at My Credit Group.
