The Fee Hand of the Market 0

The game of Fee Card Monte continues:

Nearly two years after the Federal Reserve began requiring banks to get customers’ permission before subjecting them to controversial overdraft practices, many account-holders are still surprised when they are charged overdraft fees for debit-card purchases or ATM withdrawals that could simply have been declined, says a new study financed by the Pew Charitable Trusts.

The Pew study found that more than half of those hit with overdraft fees did not believe they had opted in to the policies, which enable banks to approve purchases or withdrawals for customers short of funds and then charge them fees for the transactions. Pew says the median bank overdraft fee is about $35.

One is tempted to say, “Read those statements banks send you about ‘changes to the agreement’ carefully,” but, really, that’s pointless advice.

If you have a magnifying glass strong enough to make that four-point type legible, you find quickly that the prose is a multi-syllabic word salad that even Sarah Palin would step back to admire. Follow the link for a description of some of the semantic games banks play.

Here’s the two magic words for avoiding this.

Pay cash.

I don’t mean pay cash for everything; that’s an absurdist fantasy attractive only to those who fancy themselves “Libertarians.”*

I mean pay cash for that cup of coffee. Pay cash for those three bags of chips from the dollar store. Pay cash for anything under twenty dollars.

Will paying cash automatically keep your pocket from being picked?

No. It will make keeping track of your checkbook a lot easier. Then you can keep yourself from overdrawing your account.

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*Libertarian: A Republican who’s ashamed to admit it.