Find the best credit card offers online.The popularity of debit cards is skyrocketing these days, partly due to the heavy marketing that credit card companies are putting behind it and partly due to the loss of confidence consumers are experiencing regarding credit cards.
As debit card usage continue to increase, some of the more unwelcome experiences of using a debit card are coming to light. One of the worst offenders is overdraft fees.
Overdraft fees are the fees that debit card holders get when they spend more money than the amount they have in their checking account and they are enrolled in an overdraft program. Overdraft programs are programs that debit card issuers have which protects a card holder from having a transaction canceled because he or she does not have enough money deposited to cover the transaction. Debit card issuers say overdraft programs are a service which prevents card holders from getting embarrassed when they reach the counter and cannot finish the transaction because of insufficient funds. Consumer advocates say otherwise.
According to consumer advocates, overdraft protection policies usually do not work out well for debit card holders. Transactions that go through even though there is not enough money to cover it will get the card holder overdraft fees which, at the moment can be as high as $35. Even more worrying is the fact that, for a single day, debit card issuers will allow a debit card holder to make multiple purchases beyond the money available in their debit cards, charging overdraft fees for each transaction. Furthermore, debit card holders who fail to notice that their checking accounts connected to their debit cards are already in the red and bring it back to balance will be charged with additional penalties as well.
At the moment, debit card holders are automatically enrolled in an overdraft program when they get a debit card. They cannot opt out of it either, unless they want to cancel their debit cards. However, this may soon change as major banks such as Chase, Bank of America, Wells Fargo and U.S. Bank are planning to allow customers to opt out soon. Bank of America has been reported to allow opt-outs by next month. U.S. Bank and Chase are going to start allowing opt-outs next year. Wells Fargo has not released a timetable yet.
The change in policy is most probably due to the recent announcement of Senator Chris Dodd to introduce new legislations which will prevent overdraft program auto enrollment for debit card users. The Credit CARD (Card Accountability, Responsibility and Disclosure) Act actually will prohibit overdraft program auto enrollment. However, it will only be applicable to credit cards. After Dodd’s announcement, major banking companies such as Chase, Bank of America and Wells Fargo announced their policy changes.
