Bank Overdraft Fees And The Transaction Register
Customers at banks are often enrolled in a program known as overdraft protection
. The idea is that when a transaction accidentally runs over into red or negative territory, the bank steps in and pays the transaction without the need for customer intervention. People who do not use checkbook registers often make such mistakes in using the ATM or check card.
Instead, the bank temporarily lends money to the account holder which is passed onto the merchant. This is done without acknowledgement of the account holder. The result is that he or she is not even aware that he or her account has gone negative. In fact, many banks used to enroll their customers in overdraft protection programs by default without notification. Although the bank customer gets the benefit of never having a transaction denied, he or she must pay a fee each time overdraft protection is invoked.
In representing their constituents, congress demanded that banks put a stop to this. It seemed like an underhanded way of making money off their customers. Certainly it was egregious in cases where the fee topped $35 and the causative transaction was less than $2.
In response to the financial excesses of the early 2000s, Congress enacted legislation that would the overdraft protection program unless a customer opts in for it. In addition, federal courts have demanded that banks pay back their customers these excessive fees. But banks are vigorously contesting the ruling in higher courts.
The abolishing of automatic overdraft protection means customers have to watch more carefully how they spend their money. One way is to monitor the checkbook register or transaction register closely.
However, a more modern method of tracking finances is checkbook software. Although it is not as portable, it can be used to record transactions with greater detail. Past records are quickly retrieved with various search criteria, and transactions can be sorted in different ways.
by: Bertrand Vogelstone...
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