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It Pays to Call

May 3rd, 2016 at 02:59 pm

Just did my checkbook reconciliation for work, and - yikes! - there was a service charge on there!

I have overdraft protection for my business checking and there is about $26,000 in the savings that the overdraft draws from so I was surprised. I could have just let it go; it's just $5, right? But I called my bank, and they explained that the overdraft draws in increments of $100 and I have to keep a minimum of $300 in my account, so I dipped below the minimum amount.

The woman said there was nothing she could do, so I asked if there was someone that could do something because in my mind this isn't really overdraft protection. She connected me to a supervisor, who said she was increasing my increment to $500 to cover the minimum and then some. And she was returning my $5.

The call was only 5 minutes and I was doing work during some of it (while I was on hold). I realize some people don't think $5 is worth it, but I solved a future problem as well, so I'm pretty happy.

Posted in Life among the Self-Employed | 10 Comments »

10 Responses to “It Pays to Call”

  1. Joan.of.the.Arch Says:
    May 3rd, 2016 at 03:30 pm 1462289413
    1462289413

    Banks. Harrumph.

  2. PatientSaver Says:
    May 3rd, 2016 at 03:43 pm 1462290235
    1462290235

    I'm glad you put out that particular fire, but as someone who works at a bank, I would never get overdraft protection. It is very costly. Far better to more carefully monitor your accounts and make sure the outgo never exceeds what balances you have.

    Many banks automatically enroll you in their overdraft protection plan so unless you specifically say "no," you've got it. Ever seen the descriptions of the plan? It would be worthwhile for you to check out what your bank says about it on their website, and to peruse the numerous footnotes, caveats, etc. It's not at all cheap!! It's a very convoluted concept and banks rake in billions from just this one feature.

  3. Buendia Says:
    May 3rd, 2016 at 03:55 pm 1462290921
    1462290921

    Hmmm... I need to look into that! Does it cost the bank money or me? I don't have fees on any of my accounts, and I earn interest on savings. What kinds of costs are there?

  4. PatientSaver Says:
    May 3rd, 2016 at 05:19 pm 1462295973
    1462295973

    Every bank will be different but in general, overdraft plans are not a good idea. They will cost YOU a lot of money.

    http://www.federalreserve.gov/pubs/bounce/

  5. Buendia Says:
    May 3rd, 2016 at 05:41 pm 1462297302
    1462297302

    Do some banks charge for overdraft protection? Mine doesn't, which is good... I have three accounts for my business - checking, savings and an additional savings account. It is great to have someone who works in banking to give us the scoop on how this all works!

  6. FrugalTexan75 Says:
    May 4th, 2016 at 01:37 am 1462325851
    1462325851

    I have overdraft protection my my ING/Cap one account. Haven't ever used it of course ... but if I were to use it, it charges 11% interest. I'll be closing all of that soon in an effort to consolidate accounts (so I then have no danger of overdrafting due to forgetting to get money moved over to the account in time to cover the rent check from my main account at the credit union ...)

  7. Buendia Says:
    May 4th, 2016 at 01:47 am 1462326457
    1462326457

    Oh, that makes sense! So it's like you're borrowing money to cover the overdraft... My accounts are linked (actually the same account number with a different suffix) so I'm just transferring money from one pot of money in the account to another pot of money in the account. At any rate, I am going to more carefully monitor and do that myself.

  8. PatientSaver Says:
    May 4th, 2016 at 11:00 am 1462359651
    1462359651

    Banks typically don't charge for overdraft protection until you use it; they use this fact a lot in their marketing materials. But it is very costly to pay overdraft fees, especially when your overdraft is a relatively small amount.

  9. PatientSaver Says:
    May 4th, 2016 at 11:05 am 1462359921
    1462359921

    http://www.consumerfinance.gov/about-us/newsroom/cfpb-report-raises-concerns-about-impact-of-overdraft-practices-on-consumers/

    Here's an article by the CFPB, the bank watchdog group that banks hate.

    http://www.pewtrusts.org/~/media/assets/2014/06/sciboverdraft20america1pdf.pdf?la=en

    Here's a report on Overdraft Protection by the Pew Center.

  10. My English Castle Says:
    May 4th, 2016 at 02:23 pm 1462371792
    1462371792

    We have perhaps what Buenida has--an automatic transfer from savings if the checking is in danger of O/D. That's free for us with a minimum of $500 in the savings. I hate keeping $500 in savings at their stupid rates, but it does provide for some lapses.

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