Credit and Debit Card Ratings

Get Financially Fit by Avoiding Rising Overdraft and ATM Fees

Have you ever made a $20 purchase with a debit card and ended up shelling out $50 because you forgot you didn’t have enough money in your account? If you did have to fork over an additional $30 to pay that dreaded overdraft fee, you’re actually a little bit fortunate. That’s because a new study by Bankrate.com pegs the average overdraft fee at $32.74, a new high as well as the 16th consecutive year the study has found an uptick in the penalty consumers must pay for sending their account into the red. Which all points to the need to avoid overdraft fees in order to remain financially fit.

As part of its 17th annual Bankrate Checking Survey, the personal finance website surveyed the 10 largest banks and thrifts in 25 of the country’s largest markets. The survey found that overdraft fees also have geographic distinctions. At $34.80, Philadelphia had the highest, while San Francisco had an average fee of $26.74.

Over the summer the Consumer Financial Protection Bureau (CFPB) put overdraft fees in its cross hairs, noting that the median debit card purchase is just $24. When an overdraft fee of $32.74 kicks in – which consumers typically pay within a few days – the CFPB noted that it amounted to a short-term loan with an interest rate of over 17,000 percent.

There are ways to avoid overdraft fees. One is to simply decline overdraft protection, which has the effect of disallowing any purchase you don’t have the funds to cover. Another is to sign-up for email or text alerts that make you aware when your account has dwindling funds. Still another is to use prepaid debit cards, which only allow you to spend the amount of money you’ve pre-loaded into the account. While some prepaid debit cards have overdraft protection, it’s wise to decline it.

The Bankrate survey had more grim news for the users of debit cards. The trend line for ATM fees is similar to that of overdraft charges, with the average cost of using an out-of-network machine reaching a new high of $4.35 per transaction. This charge includes both the fee consumers pay to the owner of the ATM as well as the amount they must pay their own bank for going out of network. As is the case with overdraft fees, location matters. In Phoenix, the average ATM fees were $4.96, while Cincinnati was the lowest at $3.75.

There was some positive news in the study. This year marked the end of a steady decline in the number of free checking accounts available to consumers. In 2009, 76 percent of non-interest checking accounts did not charge a fee, a number that steadily declined to 39 percent by 2013. This year, though, the percentage seemed to stabilize at 38 percent.

 

 

Author: Chris Warren

  • Get Financially Fit by Avoiding Rising Overdraft and ATM Fees

    Get Financially Fit by Avoiding Rising Overdraft and ATM Fees

    Have you ever made a $20 purchase with a debit card and ended up shelling out $50 because you forgot you didn’t have enough money in your account? If you did have to fork over an additional $30 to pay that dreaded overdraft fee, you’re actually a little bit fortunate. That’s because a new study by Bankrate.com pegs the average overdraft fee at $32.74, a new high as well as the 16th consecutive year the study has found an uptick in the penalty consumers must pay for sending their account into the red. Which all points to the need to avoid overdraft fees in order to remain financially fit.

    As part of its 17th annual Bankrate Checking Survey, the personal finance website surveyed the 10 largest banks and thrifts in 25 of the country’s largest markets. The survey found that overdraft fees also have geographic distinctions. At $34.80, Philadelphia had the highest, while San Francisco had an average fee of $26.74.

    Over the summer the Consumer Financial Protection Bureau (CFPB) put overdraft fees in its cross hairs, noting that the median debit card purchase is just $24. When an overdraft fee of $32.74 kicks in – which consumers typically pay within a few days – the CFPB noted that it amounted to a short-term loan with an interest rate of over 17,000 percent.

    There are ways to avoid overdraft fees. One is to simply decline overdraft protection, which has the effect of disallowing any purchase you don’t have the funds to cover. Another is to sign-up for email or text alerts that make you aware when your account has dwindling funds. Still another is to use prepaid debit cards, which only allow you to spend the amount of money you’ve pre-loaded into the account. While some prepaid debit cards have overdraft protection, it’s wise to decline it.

    The Bankrate survey had more grim news for the users of debit cards. The trend line for ATM fees is similar to that of overdraft charges, with the average cost of using an out-of-network machine reaching a new high of $4.35 per transaction. This charge includes both the fee consumers pay to the owner of the ATM as well as the amount they must pay their own bank for going out of network. As is the case with overdraft fees, location matters. In Phoenix, the average ATM fees were $4.96, while Cincinnati was the lowest at $3.75.

    There was some positive news in the study. This year marked the end of a steady decline in the number of free checking accounts available to consumers. In 2009, 76 percent of non-interest checking accounts did not charge a fee, a number that steadily declined to 39 percent by 2013. This year, though, the percentage seemed to stabilize at 38 percent.

     

     

  • Helping A Spouse With Ways To Increase Their Credit Score

    Helping A Spouse With Ways To Increase Their Credit Score

    Anyone who has ever been married knows that a successful union requires plenty of accommodation and teamwork. While that’s an obvious message when it comes to raising children or keeping the house in order, it also extends to maintaining the good credit any couple will need in order to buy a new home or car. This often can mean finding ways to increase a spouse’s credit score. Marital teamwork is especially important if one spouse has a significantly lower credit score than the other. “While married couples don’t inherit each other’s credit score, one partner’s weak rating could sink the family’s financial goals,” writes Farnoosh Torabi in a new article for Money Magazine. Indeed, as the article makes clear, if husband or wife has a FICO score below the mid-700s, chances are the couple will be penalized with higher interest rates should they need to borrow money to purchase a car or a house.

    Fortunately, Torabi lays out for couples ways to increase their credit score. They include:

    • Paying bills on time: Because your credit score is largely based on whether you pay your credit card and other bills on time, one easy step to take is simply ensuring that happens. Nobody wants to be a nag, so Torabi suggests setting up automatic account alerts to notify your partner when a bill is coming due.

     

    • Don’t be the life preserver: Although it might be tempting to dip into your own savings to erase your spouse’s debt, Torabi notes that doing so might be counterproductive. If your spouse’s debt is the result of poor decisions and reckless spending, giving them a clean slate won’t teach them anything and instead may encourage them to go back to their bad old ways. Instead, she says cutting back household expenses – especially your spouse’s spending – will help pay off the debt and teach valuable lessons.

     

    • Work together: One tool for raising your spouse’s credit score is allowing him or her to become an authorized user on your credit card account. If you together pay your bills on time and in full, both you and your spouse will reap the rewards of a higher credit score.

     

    • Don’t co-sign: While it may be a good idea to add your spouse as an authorized user to your credit card, avoid the temptation of co-signing for his or her new card. Doing that puts you on the hook for whatever debt your spouse incurs, a very bad thing in the event you ever split. Instead, Torabi says to consider encouraging your spouse to get a secured card. Secured cards require an upfront deposit that serves as the account’s credit limit, which means they are easy to obtain. If your spouse can make payments on time and in full he or she will soon see their credit score rise.

     

     

     

Credit and Debit Card Ratings