Let's finish up today by discussing a sneaky way that banks buffer their bottom line. It really isn't a loan, but, in some ways it is: Overdraft Loans. In the past, if your checking account balance was near the zero mark, you wouldn't be allowed to debit your account past zero. It didn't happen. Your transaction would be denied.
Banks got greedy (as we have all been witness to in the recent financial stuff in the news). They will "allow" your transaction to go through. You think that you still have money in your account, but there really isn't. The bank will, of course, assess a fee, say $34, so that you can have the tank of gas. Now you owe the bank $34 that you didn't have. Other checks or transactions will "bounce" too. It may often cost you several hundred dollars for an overdraft as little as $1. Who gets the money?
The bank.
Who gets screwed?
You.
Better to have an extra $100 in your account that you don't intend to spend. Or ask the bank to set the debit overdraw to zero on your account. Whatever you do, be sure to use the "savings" to pay down your credit card debt.
Have a GREAT day!
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