Thursday, January 07, 2010


Credit card debtors are like embezzlers. Bookkeepers or other employees with the ability to take money from their employer usually intend to return the stolen money shortly. Unfortunately, the circumstances that led them to steal in the first place prevent them from returning the money and usually lead them to steal more. Credit card holders may have intended to pay off their monthly credit card bills but when they find themselves unable to do so, they keep right on spending until they run up thousands and thousands of dollars in credit card debt.

Next month, credit card reforms enacted by Congress and signed by the president will go into effect, but not without unintended consequences. The new laws were designed to stop banks from abusing credit card holders with practices such as imposing unreasonable interest rates. No good deed goes unpunished. Those of us who pay our credit card debts off every month will soon be having to pay a price for the undisciplined and unbridled idiots who have been unable to pay off their credit card bills.

Consumer advocates report that, in order to make up for any losses incurred by the credit card reforms, there are up to 250 common banking fees that will begin cropping up for many customers. Some of the most significant fees consumers should be aware of include:

Minimum balance fees
Tele-banking fees
“Fraud-protection” fees
FDIC insurance fees
Incoming wire fees

Banks are adding fees to checking accounts. Along with monthly fees just for the privilege of having a checking account, new charges include new fees or higher fees for:

Becoming overdrawn
Remaining overdrawn
Overdrawing multiple times
Transferring money from another account
Using a debit card in a foreign country

And here, from, is some really important information for all bank customers concerning unreasonable overdraft charges:

Customers who don't keep close tabs on their checking accounts could rack up close to $400 in fees in a single day at some banks. This is because they've raised the number of overdraft charges per day from 5 to 10, and some banks charge $39 per overdraft.

Banks use a "highest first" method of posting checks to customer accounts, so an accounting error of a couple hundred dollars can be devastating. Say you made a house payment of $1,000 and also made 5 small purchases, totaling $100. You thought that you started out with $1,150 in the account and that you still have $50 in the account, but you really had only $950.

Because the bank will process your large payment first, you will receive an overdraft charge on all 6 checks that you wrote that day. Had they applied the small payments first, you would have had only one overdraft charge.

If they're charging $39 per overdraft, you are now $234 further in the hole.

The message to consumers: Be sure to write down every debit card transaction as it happens, because lost receipts can cause expensive errors. Check and re-check your math. Reconcile every bank statement as soon as it arrives, to check for errors. And don't allow yourself to become overdrawn.

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