It’s the day before payday and money’s tight, but that $5 latte is calling you. You swipe your debit card, and the transaction goes through. Before you exhale, consider this: If you have pending transactions against your account, that latte could cost you hundreds of dollars in overdraft fees.
According to the Center for Responsible Lending, many banks now provide debit card overdraft coverage without their customers’ knowledge or consent, at triple- and quadruple-digit interest rates. As a result, many families get trapped in a cycle of payday loan-type debt. Here’s what you can do:
- Tell your bank that you do not want debit card overdraft coverage
- Ask your bank to disclose the fees associated with your debit card
- Consider alternative forms of overdraft protection, such as linking your debit card to your savings account
- Educate yourself about debit card fees by logging onto www.responsiblelending.org