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article imageBanks know not enough balance, Approve Debit Card and charge Overdraft Fees

By Chris V. Thangham     Jan 30, 2007 in Lifestyle
Banks know there is not enough balance, but approve your Debit Card transaction and charge overdraft Fees
Forty dollars for a Big Mac? That might sound over the top, but it barely tips the outrage meter when you compare it to the 20,000-percent-interest loan U.S. consumers regularly take out to pay for such $40 burgers. How could this be?
Well, bounced checks just aren't what they used to be.
A new study says that most of the time consumers overdraw their accounts now, bounced checks aren't the culprit. Instead, debit card purchases are chief cause of overdrafts.
It is a lengthy article but everyone should read it. When one uses debit cards at McDonald's restaurant and buy a Big Mac, the sale goes through whether they have money in the bank or not. If there is no money in the account, the Bank Charges a "Courtesy Overdraft" fee of $30 to $40. Instead of just rejecting the purchase, they approve on your behalf and they use this as interest fee for the loan they are giving you, so you end up paying $40 for the burger. Say the Big Mac is $4, then you will end up paying 1000 percent interest for a short term loan. The article says the banks are making huge profits. The Bank has collected more than $10 Billion dollars alone in 2005 from these overdraft charges. Read the article for tips and pitfalls for all these debit card transactions.
So, be careful when you use these debit cards. I always try to keep a minimum balance threshold, and also check the bank regularly to see what are the charges. It is a shame, the banks don't give us enough interest for the money we have, charge huge interest rates for the loans and want more from us.
More about Greek banks, Consumers, Overdraft, Transaction
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