Do Overdrawn Accounts Get Charged Extended Fees?
Although unpopular with many bank customers, some banks can, and do, charge extended overdraft fees. The fees vary from bank to bank, and not every bank imposes this policy. Most extended overdraft fees are charged on a per day basis after a certain amount of time has passed since a checking account has been overdrawn.
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Background
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In 2009, legislation was passed that limited a bank's ability to charge its credit card customers certain fees. In the wake of this legislation, banks responded by creating fees to make up for lost revenue. As a result, extended overdraft fees have become increasingly common. Customers with good credit aren't profitable -- as they typically pay their credit card bills on time -- and banks are hesitant to give credit cards to customers with poor credit histories. As such, extended overdraft fees make up for the revenue banks have lost during these tough economic times.
Extended Fees
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Extended overdraft fees go beyond regular overdraft fees. Typically, when a bank customer bounces a check or is overdrawn due to some other circumstance, a one-time fee is charged. However, many banks are now charging extended overdraft fees; these fees continue to accrue until the customer brings his balance out of the red.
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Procedure
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Extended overdraft fees vary from bank to bank. Some banks give overdrawn customers seven days before imposing extended overdraft fees, other banks charge extended overdraft fees for every day the customer is overdrawn. Although Congress passed legislation in 2010 making involuntary overdraft protection illegal, extended overdraft fees are still legal. In other words, banks get to set their own policies as to whether to impose extended overdraft fee policies.
Considerations
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Some banks charge extended overdraft fees to customers who are overdrawn due to debit card use. The best way to avoid the fees is, of course, to make sure your bank account has enough funds to cover expenses. Additionally, some banks will automatically withdraw funds from a customer's savings account and deposit those funds into an overdrawn checking account to avoid charging overdraft fees. It's best to check with your bank so you're familiar with its overdraft policies.
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