July 1, 2009
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News: Banks Find Loopholes in CC Law
One month after the signing of the new credit card reform act, banks have begun implementing new procedures for raising revenue that scoot around the new law. The most notable loophole is that the new law only covers credit card practices and not debit cards. Reports of customers being hit hard with unfair and excessive debit card fees have spread across the country. Recently a friend of mine told me how he inadvertently double paid a $900.00 credit card bill. The error ended up costing him over $200 in overdraft fees against his BB&T account. You see, my friend had used his debit card to pay for small essentials with several of the transactions amounting to less than $10.00. When my friend realized his mistake, he immediately transferred funds from his savings to his checking. To his surprise, on the very same day his transfer hit so did the more than $200 in debit charges. He was charged $35 for each swipe including one for $1.78.
Outraged, he visited his local BB&T branch. He was told that according to the terms and conditions of his debit card, an overdraft fee is generated according to the moment the card is swiped. It doesn't matter if the money is in the account when the actual draw hits. To add insult to injury, the bank employee told him to read the fine print and that in wake of the new credit card reform act, banks need to make up their losses somehow. Clearly this was a case where my friend would not have lost a significant amount of money if he had used his credit card instead. Banks are known for burying misleading information in the fine print of card contracts. Debit card contracts are no exception.
As banks continue to dive into the new credit card law's loopholes, consumers can expect to see them using new ways produce earnings. Three popular methods are higher overdraft fees, higher ATM fees, and higher late payment fees. All three are avoidable. Consumers must remain proactive and aware of what's happening with their bank accounts. They can avoid these fees by tracking all debits to avoid overdrafts; use point-of-sale cash back opportunities or visit their local bank branch to avoid ATM fees; and allow sufficient amount of time for your payment to reach your lender or use the online payment options.