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No fees, but you can be held up by holds Overdraft Protection
End of overdraft protection can have a down side
Date published: 9/2/2010
BY CHELYEN DAVIS If you live paycheck to paycheck, it's time to start A new federal law is changing some aspects of banking, including "overdraft protection." In the past, if you overdrew your account, banks would go ahead and cover your transaction, then charge you a fee for it. Now, unless you have opted in to overdraft protection, banks will mostly just decline those transactions, without charging a fee (except for paper checks and recurring debit transactions). A July survey by the National Center for Credit Counseling showed that just one-fourth of about 2,000 respondents would opt in to banks' overdraft protection. Consumer advocates say the overdraft "protection" offered by banks really just exacerbates a problem, since they're charging overdraft fees to customers who are already financially strapped. Banks say overdraft protection saves customers from embarrassment at having transactions declined, or from being unable to access any cash in an emergency. One place where this could get tricky is when customers use bank-issued debit cards for purchases like gas, car rentals or hotel rooms. Whether you've noticed it or not, paying at the gas pump with a debit card usually means the bank puts a hold on your account--about $75 in many cases--until it gets the information on just how much your gas actually cost. It can sometimes take days for those holds to clear, although Visa is apparently in the final stages of implementing "real time clearing," in which the hold should vanish in minutes or hours. "Our customers were frustrated, if not furious" with holds, said Jeff Lenard, spokesman for the National Association for Convenience and Petroleum Retailing. Some other industries, like car rental companies and sometimes hotels, also use holds on debit cards, something the cash-strapped should be aware of. That car rental may cost $100 in the end, but you could find a hold of several hundred dollars put on your account till you return the car. The same goes for using debit cards at some hotels. Overdraft fees vary by bank, and most of them encourage customers to link multiple accounts so that if the checking account is overdrawn, the money can get taken from a different account. That often incurs a fee, although it's usually less than a traditional overdraft fee. According to its website, Bank of America won't charge a fee if you're overdrawn less than $10 in one day. The fee is $35 per item if you overdraw more than $10, and additional fees when you're overdrawn for five consecutive business days. At Wells Fargo, which owns Wachovia, the fee is $35 per transaction, up to four a day. The website emphasizes that payment of your overdraft transactions is at the bank's discretion. Chelyen Davis: 540/368-5028
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Date published: 9/2/2010
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