Embarrassment at the Register: New Debit Card Rules
Now that summer has officially arrived, are you making time to shop, go to the beach, take day trips and vacations? If you are, then take note:
As of July 1, there has been a big change to your checking account. If a debit card transaction will overdraw your account, your charge will be declined. That's the change. You might be thinking, "That's not a big deal. I don't spend more than I have in my account." If that's the case, then this is no big deal for you. If you are one of those people who cuts it close, you may feel the sting. That could mean embarrassment at the register while you search your wallet for cash or a credit card. Or worse, you may find yourself without cash, or access to cash, if your debit card is the only payment option you have with you.
Bottom line, you will have to be on top of your finances. Many of us have gotten out of the habit of balancing our checking accounts because we rarely write checks. Our debit cards don't come with handy little account balancing booklets. But that shouldn't stop us from keeping track of our account balances. Going forward, you will need to know what you have in your checking account before you make a purchase. Not a bad thing in my book.
So, how are you going to track the money in your checking account? Here are some options you might consider:
Of course, there is another option, but it's expensive. Banks do offer overdraft protection. This is often a credit card or revolving credit account that is associated with your checking account. When there's an overdraft, you receive a "loan" to cover the additional amount needed. Of course, that means you will have to repay the loan amount plus additional interest charges incurred.
In the past, the banks were more than happy to let you overdraw your account. They would receive an overdraft charge of $30 plus dollars for each bad transaction. This was a big revenue source for banks. I'm sure it amounted to millions of dollars each year.
With the banks losing the opportunity to collect all these overdraft fees, they will be looking to make up that revenue somewhere else. That could mean the end of free checking accounts, or you might see a new type of transaction fee. Watch your accounts and read through the inserts in your statements for changes. Be proactive so you don't get caught paying fees you didn't need to pay.
As of July 1, there has been a big change to your checking account. If a debit card transaction will overdraw your account, your charge will be declined. That's the change. You might be thinking, "That's not a big deal. I don't spend more than I have in my account." If that's the case, then this is no big deal for you. If you are one of those people who cuts it close, you may feel the sting. That could mean embarrassment at the register while you search your wallet for cash or a credit card. Or worse, you may find yourself without cash, or access to cash, if your debit card is the only payment option you have with you.
Bottom line, you will have to be on top of your finances. Many of us have gotten out of the habit of balancing our checking accounts because we rarely write checks. Our debit cards don't come with handy little account balancing booklets. But that shouldn't stop us from keeping track of our account balances. Going forward, you will need to know what you have in your checking account before you make a purchase. Not a bad thing in my book.
So, how are you going to track the money in your checking account? Here are some options you might consider:
- Have an iPhone? There are multiple phone apps that will help you balance your checking account while you're out. Depending on your bank, you can even transfer money and make payments.
- Set up email or mobile alerts through your bank so you know when your account falls below a specified dollar amount.
- Set up a spreadsheet on your laptop or computer. Track your transactions daily and balance them against your bank balance online. It only takes a few minutes a day, and you won’t have to wait for your monthly statement.
- Carry a paper balancing booklet with you (old-fashioned but effective).
Of course, there is another option, but it's expensive. Banks do offer overdraft protection. This is often a credit card or revolving credit account that is associated with your checking account. When there's an overdraft, you receive a "loan" to cover the additional amount needed. Of course, that means you will have to repay the loan amount plus additional interest charges incurred.
In the past, the banks were more than happy to let you overdraw your account. They would receive an overdraft charge of $30 plus dollars for each bad transaction. This was a big revenue source for banks. I'm sure it amounted to millions of dollars each year.
With the banks losing the opportunity to collect all these overdraft fees, they will be looking to make up that revenue somewhere else. That could mean the end of free checking accounts, or you might see a new type of transaction fee. Watch your accounts and read through the inserts in your statements for changes. Be proactive so you don't get caught paying fees you didn't need to pay.
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