Discover Debt Freedom!

In the last year, the banking industry has made billions of dollars in checking account fees as the economy has nose-dived and many people have struggled with making ends meet.  In fact, the banks made around $24 billion dollars in overdraft fees alone.  For financial stability, it is very important to know how to avoid unexpected checking account fees which can add up very quickly and end up costing the account holder hundreds of dollars per year.

Avoid Overdrafts
One of the biggest revenue streams for a large bank is the money that they bring in from overdraft fees to checking accounts.  These fees have been so lucrative for the banks that they have increased the amount of the fee from average of $10 per day to an average of $30 per occurrence and there is no limit to the number of fees you can be charged for a single day.  Debit cards have increased the chance that people will overdraw their accounts without knowing and can rack up a large number of fees in a relatively short period of time.  It is very important to know the balance of your checking account and track all of your purchases to avoid incurring overdraft charges.

Review Your Checking Account Options
Most banks have a number of different checking account options for people to choose from with different fee levels for each type of account.  Some checking accounts require a minimum balance while others place a limit on the amount of checks you can write or the number of times you can conduct a teller-assisted transaction.  By reviewing these options carefully and comparing accounts across banks, you can ensure that you are not paying for features that you do not need and that you are not going to be charged a penalty for having a lower balance or using more checks than the checking account allows for.

Use Your Bank’s ATMs
Nearly every bank charges a fee for using any ATM branded for a different bank, typically $1.50 to $3.00 per transaction, and that is on top of the fee that the other bank is going to charge for drawing money out of their ATM.  Although this amount may not seem like much during the transaction, using a different bank’s ATM once a week will cost you between $182 and $260 every year in ATM fees.  These fees also increase the chance that you will overdraft your account because many people do not take these fees into consideration when balancing their checking account.  Plan your ATM withdrawals carefully so that you can avoid having to draw money from another bank’s ATM.

In the early 2000’s, banks discovered that they could make a lucrative profit from increasing the rates that they charge for overdraft fees incurred by people that use debit cards that are linked to their checking account.  Because the banks could make a great deal of money with little or no effort on the part of the bank, many of the banks grew addicted to these profits and tried to find ways to make the process even more profitable.  Today, the actions that the banks have taken regarding overdraft fees have angered much of the nation to the point where Congress is considering passing legislation reining in these practices.

Overdraft fees have become part of a contentious debate over the ways that the banks are choosing to do business with the general public.  Although the banks claim that they are doing nothing wrong, many opponents of these practices claim that the banks are preying on their most vulnerable customers and taking advantage of the situation.  Most of the problems stem from the changes that have been made to bank overdraft policies over the past decade.

How Overdraft Policies Have Changed

In the past, banks used to charge around $10 for an overdraft that occurred with a debit card linked to a checking account and that was only if the customer signed up for overdraft protection at the bank so that the transaction would not simply be denied.  Then banks started automatically enrolling all of their debit card customers into their overdraft protection program and automatically authorizing transactions that put their customers over their account balance.  The banks also eliminated the cap on the number of overdraft charges that a person could incur on a single account in a single day and starting charging an overdraft fee for every transaction that overdrew the account, often as much as $35 per occurrence.

Because of the success of these methods at bringing in profits, the banks instituted some other questionable practices seemingly designing to maximize the amount of overdraft charges that their customers would incur.  One such practice was changing the ways that transactions were processed, from chronological order to processing transactions from biggest to smallest.  According to the banks, this was supposed to ensure that the more important transactions were processed first and not denied, but the result was that many people incurred multiple fees for low dollar transactions, such as cups of coffee, magazines, or fast food lunches, instead of a single fee if the transactions had been processed in the order in which they occurred.

As a result, banks and credit unions obtained close to $24 billion in overdraft income during 2008, according to a report from the Center for Responsible Lending.  This was 35% higher than the total from two years prior.  As a group, Americans are spending more of their income on overdraft fees than they spend on fresh vegetables, cereal for breakfast, or books.  The best course of action for consumers today is to try to avoid debit card overdrafts by keeping careful records of deposits into the checking account and how much has been spent using checks and debit card purchases.

Short term personal loans have been a lifesaver to millions of individuals that need a small amount of money to handle urgent financial responsibilities.  These loans are available in a number of different places and knowing what you need to look for in order to get the best short term personal loan will help you make your search a successful one.  There are several features that you will need to look for and the loan that has each feature in an acceptable range for your needs and financial situation should be the loan that you choose.

A Reasonable Interest Rate
One of the most common reasons that individuals choose to obtain a short term loan is that the interest rate for the loan will be lower than the interest rate that will be charged by a credit card company for placing the purchase on their credit card.  The interest rates charged for short term personal loans are generally competitive between lenders interested in obtaining your business, although the interest rate for the loan will be higher than for borrowing the same amount of money with a long term loan.  The actual interest rate may be higher, but in a majority of cases, a person will pay much less interest for a loan held for a shorter term.

Fair Terms And Conditions
Every person that is interested in obtaining any type of loan should understand the importance of reading all of the terms and conditions associated with a loan.  Reviewing the terms and conditions that dictate how a short term personal loan will be repaid is the only way for you to know exactly what you are agreeing to and will reduce the risk of getting hit with hidden fees and interest rate hikes in the future.  If there is anything written in the terms and conditions of the short term personal loan agreement that you do not understand, you should have the loan originator or a trusted individual explain the item to your full satisfaction before you sign your name to the agreement.

A Reputable Lender
Over the last decade, many different types of lenders have opened up shop in various areas across the country.  Many of these lenders are great for doing business with, offering good products at reasonable rates to all that qualify, but a few of these lenders are only in the business of taking your money.  Before deciding on a loan provider for a short term personal loan, you should do some research and talk to family members, friends, and acquaintances about their experiences with various lenders.  Obtaining this information will allow you to steer clear of bad lenders and focus on the ones that treat their customers fairly and have reasonable terms for their loans.