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By Everett Maclachlan
Modern banking with major banks offers their customers a range of benefits, perks, and features not available even 5-10 years ago. Today, most banks offer overdraft protection, free checking, automatic check copies embedded in receipts, debit cards, and online banking.
However, despite all of these benefits, there are some drawbacks to modern banking, as well. Namely: deceptive or questionable bank practices that can lead to their charging excessive overdraft fees.
For example, banks have admitted to practicing transaction stacking, whereby they purposefully process larger transactions before smaller ones in order to increase the chances of a fee being charged due to non-sufficient funds in the account. With fees up to $35 a pop at many major banks, this practice has turned into a huge profit center for banks.
And these practices are well-documented, as evidenced by a recent 2010 settlement against a national bank ordered by a California judge. The settlement levied over $200 million in fines against the bank as a punishment for creative accounting practices that led to billions in excessive overdraft fees in that state alone.
Seniors, middle-aged people, and even people in their 20s are affected by these trends. However, there is speculation that banks may target in particular the very young, as well as seniors and retired persons, in particular in their fee-charging schemes.
If you are looking for a checking account with overdraft reserve for seniors, you will be happy to know that there are many options for reducing the fees you pay your bank. Here are 3 options to help you save money by avoiding overdraft fees:
1. Keep a cash reserve in your primary checking account:
One option you have is the simply try to keep a few hundred dollars of reserve cash in your checking account at all times. By not counting this extra cash reserve in your calculations, you will be unlikely to overdraw your account. One drawback: it is not easy for everyone to maintain such a reserve.
2. Link a secondary checking account or savings account to your primary account:
Another option is to ask your bank to link another checking account or a savings account with your primary checking account. Then, you simply leave a reserve of cash in that account. The only trouble with this option is that you basically have to hold that cash “hostage” by not touching it – just to avoid paying overdraft charges
3. Check your balance before each purchase, including looking for pending charges:
The least-costly, but most time-consuming, option you have is to simply check your balance on a regular basis – each time you go shopping. Be sure to take into account pending credit and check charges in your calculations – they can be tricky and easy to miss!
Of course, the very best way to avoid overdraft fees altogether is to switch to a bank that does not charge them at all – even when you overdraw your account. This solution helps avoid all of the pain and expense of having to keep a cash reserve in your reserve savings account just so your bank won’t charge you more fees. Tip: when you search for a bank, look for one that offers senior fee discounts and special senior plans.
About the Author: Find a list of no-overdraft-fee banks in your area at: No Overdraft Fee Banks.
Source: isnare.com
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