No More Overdraft Fees!

  On 11/13/2009 at 6:41 PM, 42Orange said:

what makes you so sure about this Rex? I dont understand how this suddenly enables merchants to charge you for merely attempting to purchase something?

No, it doesn't - what happens (and I've been in the situation before, so I have first-hand experience) is the following:

(assuming your bank does not immediately post your transactions to your account)

You do a credit transaction at a merchant, and it takes said merchant 2-3 days to process the transaction - keep in mind, you were approved by your bank when your account balance was sufficient to cover the transaction at the time.

Then, forgetting about the transaction, you proceed to withdraw sufficient funds from your account that when once the transaction attempts to go through, there are insufficient funds, and the bank rejects the charge (because you opted out of the overdraft protection), and is sent back to the merchant.

The merchant, saddled with the chargeback, then either attempts to collect it themselves (charging you your state's maximum allowable returned item fee), or sends it to a collections agency (for whom I have worked for in the past), who likewise will charge you a collection fee.

By the bank paying (but charging you an overdraft fee), you're at least kept out of the mess of dealing with the merchant and any potential collection agencies, but creates the added headache of paying a third party and dealing with someone other than your bank.

Also, your bank could charge you a NSF (non-sufficient funds) fee for rejecting the charge, essentially DOUBLING your liability on top of the original amount of the transaction. There is a difference between a NSF and overdraft charge - the first the bank charges you for not having funds sufficient to cover the transaction and rejects the charge, and the second pays the charge, but also charges you a fee for paying it, putting your account down by however much the transaction is plus the overdraft charge. It can also create a cascade effect, where the funds you deposit to cover the charge that bounces gets eaten up by the charges by the bank, which in turn causes other transactions to bounce, and more charges to accumulate, etc.

ahh i see... Well maybe the alternative to overdrafts wont be such a pie in the sky after all... i'm still appreciative that we'll have a choice of which way we wanna get boned now.

im still on a 16 and under junior account, no overdraft, no leeway. perfect. unfortunately im not building up a credit rating but il figure that out when i get round to it.