Bank Fees & Bank Transfer Day

Did you ditch your bank yesterday? It's not too late to switch to a more consumer-friendly credit union (CU) or community development financial institution. Over the years surveys have repeatedly shown that consumers are better off at CUs than at banks. News reports indicate that 650,000 consumers joined CUs and moved $4.5 billion to these accounts in the past month in response to the proposed $5/month debit card fees. Almost anyone can join a credit union and CUs have been advertising heavily to attract customers. Transferring accounts takes some time and careful monitoring if you have your paycheck automatically deposited and various bills paid automatically. Set up the new account and make sure your auto deposits and payments are transferred over to the new account before you cancel. And then check to be sure these payments are made on time.

One commentator said that the monthly debit card fee at least was upfront and clear as opposed to so many bank and credit card fees that blind-sided consumers. You can be sure that financial institutions (and CUs are not immune from needing to raise revenue, as well) are hard at work in the back room figuring other ways to increase revenues after new federal legislation limited the fee income from debit card transactions. So be sure to read those notices included with your statement.

Check out www.bankrate.com to comparison shop for checking accounts and other financial products.

Want to spend less? Spend cash!

Behavioral finance studies find that adding so-called “felt losses” helps deter poor behavior.

For example, consumers who buy non-essential luxury items or treats with cash are likely to spend a lot less than they would if they used credit or debit cards. We actually feel psychological pain when we pay with cash. Just think how you would feel if you had to pay cash to fill the tank on a large SUV or pickup! Swiping that card, whether debit or credit, is far less painful than parting with cash.

Research confirms that consumers who use credit cards spend more than those who use cash. Further, credit card users are much more likely to spend more than they intended. That’s why every department store offers incentives to sign up for their credit card.

New Overdraft Rules for Debit & ATM Cards

Debit and ATM card holders have additional overdraft options under the new Federal Reserve rules. In the next few months, financial institutions must offer you the ability to make decisions about overdraft services for transactions made with your debit or ATM cards.

Generally, there are 2 types of overdraft services:

1. Standard overdraft services
2. Overdraft protection plans

The new rules allow you these new options:

1. You choose to "opt in" which grants your financial institution permission to apply standard overdraft services to debit and ATM card transactions before you can be charged overdraft fees.
2. If you have an existing account and you don't "opt in", then beginning August 15th, any previous overdraft fees won't apply. Transactions will simply be declined instead of charging overdraft fees.
3. If you open a new account after July 1st, you will not be charged overdraft fees by your financial institution unless you "opt in".
4. The new overdraft rules give you more flexibility. You can add and remove overdraft services at any time.
5. The new rules do not cover checks or automatic bill payments. Your bank will automatically enroll you in their standard overdraft services for transactions like these.

Visit the Federal Reserve website to learn more details about the new overdraft rules.