Pay Overdraft Fees Or Pay For Protection Plans

Many Americans are living paycheck to paycheck and any type of additional charge or emergency bill can make juggling finances a struggle

. It is the small day to day expenditures which create more banking errors creating the influx of bank fees. Pricey fees for small mistakes are costing Americans billions of dollars each year.

Shuffling transaction order is one way that some banks are creating multiple fees. At the end of a business day, the transactions are subtracted from your balance and any overdraft charges will be placed. A standard practice is to subtract the transactions in the order in which they occurred. At 10am you bought a coffee and Danish for $6, at 1pm you spent $18 for lunch, oil change on the way home was $75 and a last minute stop for groceries was $35. If you only had $100 in your bank, you would be charged a fee for your last charge. Some financial institutions have abused this system by reordering transactions to subtract from high to low. This would make the $75 charge first and your groceries of $35 second with an attached overdraft fee. Let's not forget that there were two other charges on your account that day. There would be additional overdraft fees for each of those as well. That bank just collected fees three times in one day by rearranging the order of your transactions. A person, who is stretching their dollar to the next paycheck, will be facing additional problems as a result of this practice.

A disconcerting fact that banks collected almost $30 Billion in overdraft fees in 2011 is staggering. Programs to protect accounts from overdraft fees cost money as well. People are confused as to how to best protect themselves from these additional charges. Banks can report that they have lost money in overdraft charges from years in the past, (in 2009 the fees reached an all-time high of just over $37 billion), but they found their way around that by charging for protection.

Marketing is spread with reports to stay away from predatory lenders in order to protect your finances, but a trusted financial source includes bad apples as well. Payday loans, cash advances, and title loans are all publicized as companies who prey on certain borrowers. Banks have the unspoken trust, but reports of abusive practices are showing their true colors. There have been some changes made to correct these practices and there is a hope that more banks will follow suit.

It all comes down to the same basic practice when finding and signing on to a financial service. Do your shopping and find out all the facts before money is exchanged. When you shop for a new car, you do your research and find the best price. You should use the same practices when it comes to opening bank accounts, signing on to financial services or taking out a loan. You can always find good apples in the bunch when you do your research.

Keep your fees down with the best practices for your personal situation. Living paycheck to paycheck will be less of a burden by doing so.

by: Malinda Starner

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