Broke Ass Financial Coaching: Overdrafts and Other Bank BS pt. 1

While being young, broke and beautiful is all well and good, some people’s finances are more jacked than others.  That’s why we’ve invited Betsy Crouch (aka Coach $izzle) to come onboard and dole out some much needed advice.  She is a professional financial coach after all.  If you’ve got a question you’d like answered please email her atcoachsizzle@brokeassstuart.com.  Maybe your question will be the next one answered.

“Should I set up bill pay, automatically? How can I set it up and avoid overdraft charges?”  – Joe

That depends.  First of all, are you on top of balancing your checkbook?  Have you had any overdraft charges this year?  If you have overdrafts, I would not set up any automatic payments for bills until you get organized.  So here is some crazy info that is just about guaranteed to rile you up and get you crackin’ on some cool financial projects.  That is not an oxymoron by the way.  Here are some tips on getting organized, protecting your money, and paying your bills.  It is a lot sexier than it may seem…

Blah Blah Blah Balance your checkbook

Write down each check you write in your check register, as well as any debit card purchases.  Deduct outstanding checks and debit card purchases from your available balance, this is your true balance.  Many people play the “timing” game, e.g. ‘I’ll write this check and hope that ole’ deposit goes through before so and so cashes the check,’ or ‘I’ll use the cash I have in there even though I wrote a check already, I hope they don’t cash it!’  Banks are counting on you to do that.  They make a s%$!load of cash through overdrafts, close to an estimated $38 billion THIS YEAR: Overspending on debit cards is boon for banks.  If you do get overdraft charges, march down to the bank or call them on the phone and ask for them to be reversed.

I know that when you play the timing game you are doing it for a reason.  You have something that needs to be paid and you don’t have the money.  If you end up paying an overdraft charge of $29 on something that cost $58, then you are paying 50% in one day!  Even credit card companies are limited to charging 30% interest over the course of one year.  Read the link to the article above to learn how the banks manipulate your transactions to squeeze more overdraft charges out of you, you’re gonna get pissed and do everything you can to avoid them.  By the way, if you are playing the timing game, most companies will give you a grace period just call and be in communication.  Be willing to have the tough conversation.

Get overdraft protection.

Well there is a hitch here.  Most banks automatically give you overdraft protection, the fees upwards of $30 when you overdraft.  Oh Thank YOU!  Wow.  The guy who invented “automatic overdraft protection” made the banks billions and billions of dollars, for the convenience factor.  You know when you are out fine dining you don’t want to be embarrassed that your card was declined, oh no!  Well the fear of worrying what others think of our financial situation sure is motivating.

Don’t you think the technology exists for your card to simply be declined when you don’t have any money left in your account? Why would the banks implement something so seemingly customer service oriented and give up billions of dollars? Right.

Outside of a desperate or survival mode purchase, wouldn’t you prefer for the card to be declined instead of paying a $35 fee on top of a $2.00 coffee purchase?

Oh yes, the option of “opting out” does exist, according to a former B of A customer service person.  One week ago I called unnamed bank that I have an account with for “research.”  I called customer service and asked to “opt out” of overdraft protection, they said “no,” then I asked to speak with a supervisor and she said that “no such option currently exists,” bs.  I found this letter confirming an “opt out” of US Bank’s “courtesy” overdraft protection.

Just recently, Chase and Bank of America lower overdraft charges, a widdle bit.

If you can figure out a way to “opt out” of your bank, let me know and I’ll spread the word.

Overdraft protection and bill pay tips… To Be Continued…

coachsizzle@brokeasstuart.com