Bankers take you over to the desk with the promise of helping you find the best account, but that doesn't mean they're trying to help you make the best decision. If the banker is busy, lazy or just disinterested or dishonest, you may end up with the wrong kind of account. Be sure to do your own research on what options are available.
Overdraft protection is great if you're someone who occasionally miscalculates. Banks entice you with offers of "free" overdraft protection (often if you open a savings account), and it often comes with a significantly lower fee if you do overdraw.
The problem is, you could quickly rack up charges. The overdraft protection may prevent your card from being declined, so you could tear through your savings with one lapse in attention because you have the money in savings to cover it... but you'll still be racking up those reduced fees as you do. And because some banks take a few days to assess those fees officially, you could find yourself in a hole larger than the savings you originally had.
Have you ever deposited money into your bank, assuming you could then use it, only to have that embarrassing moment the next day when your card is declined after you agree to buy everyone's lunch?
Banks may protect themselves from bad checks by only making a certain percentage available to you immediately. They may also make the funds available only if you have enough to cover it if it bounces. So if you have $3,000 in your account, the bank will probably make a $250 deposit available. But make sure your deposit has cleared before spending.
Say because of the scenario above, you think you've got $5,000 in your account. You spend the money the next day (in this order):
The problem is, you only have $1,000 in your account. The $4,000 you deposited yesterday hasn't fully cleared.
You'd think the charges would be processed in order, so you'd only owe one bounce fee of $35. But with some banks, you might be charged $105. It may seem unfair, but it's not technically illegal. The bank would argue it should pay the largest transaction (which one would assume is most important) first. So each additional transaction would also be eligible for a fee. This could easily happen on your debit card if you have overdraft protection, even though you'd assume banks can determine immediately if you have the cash or not.
The fees may be automatically assessed, but if you call — or better yet, go in person — the representative may have some empowerment to forgive or reduce fees. Just think through your issue beforehand and formulate the most-powerful rationale possible before talking to the bank. We're not suggesting subterfuge, but a well-thought-out, respectful explanation goes a long way with some reps. But if you have a history of abusing it, you'll get blacklisted, and bank reps won't be able to help you even if they wanted to.
The computer shows them what offers you qualify for, but they may be getting a commission on closing the deal. They didn't just notice something awesome you should take advantage of, and it may not be that great for you no matter how "helpful" they seem to be.
Just because you see that your bank offers full fraud protection on a credit card it offers doesn't mean your debit card is protected the same way. To find out, contact your bank to find out what level of protection it has.
I signed up for a Simple bank account to see how its no-fee policy worked. They aren't kidding. I put only $100 in and used it until it was gone to see what happened. My final purchase went through, but the cashier was notified that I still owed 67 cents. Might be worth a look.
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