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Everyday Cheapskate: Bank Fees Are Steep for Rule Breakers

Mary Hunt

Dear Mary: I had a rude awakening with a closed checking account. Two months after I closed this account, I accidentally clicked on its number to make an online purchase. I thought the purchase would be declined because the account was closed. I now am being charged double the purchase price from overdraft fees. The bank supervisor said that I did not ask for the debit card to be closed. Because a purchase was made, the account has been reopened. I must pay it all, or additional charges will accrue. I never was told any of this when I closed the account. How should I proceed? -- Tami, e-mail

Dear Tami: Banks no longer decline debit card purchases or, in some cases, even ATM withdrawals. They stopped that the day they realized that declining transactions cut into 30 percent of their profits. I'm sure your bank used its handy "overdraft courtesy" provision when this stray purchase came in after you closed the account. Your big mistake was assuming the purchase would be declined.

Pay the bank immediately, before you run up the tab any further and it is reported to the credit bureaus. Make sure you cancel the debit card in writing and return it to the bank, cut into little pieces.

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Dear Mary: We listen to Dave Ramsey. He recommends cutting up your credit cards and not using credit at all. We actually do have a credit card, pay our balance in full every month, and have good credit. We never have had a problem with credit cards or unsecured debt. What are your thoughts on Dave Ramsey's advice? -- Libby, e-mail

Dear Libby: I have great respect for Dave Ramsey and all that he has done to help people to get control of their money and pay off their debts. However, there are a few things on which Dave and I disagree. This is one of them. To get the best rates on a mortgage, the lowest premiums on insurance and a reasonable auto loan, one needs an excellent credit score. Fair or not, we live during a time when you cannot achieve an excellent credit score without at least one all-purpose active credit card account in your credit file on which you have a good payment history.

Another problem for those who do not have credit cards is buying things online. You would be foolish to use a debit card online because of its lack of security and consumer protection. Where Dave is a big fan of debit cards, I wouldn't own one myself and am as adamant against them as Dave is against credit cards. The ideal compromise, I believe, is to use a credit card as a debit card. When you use it, pay it off. You will have the credit history, a zero balance, a safe way to buy things online, and no credit card debt. That being said, I have no doubt that Dave and I agree more often than we disagree.

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Do you have a question for Mary? E-mail her at mary@everydaycheapskate.com, or write to Everyday Cheapskate, P.O. Box 2135, Paramount, CA 90723. Mary Hunt is the founder of www.DebtProofLiving.com and author of 18 books, including "Can I Pay My Credit Card Bill With a Credit Card?" To find out more about Mary and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.

Copyright 2009 Creators Syndicate Inc.

This news arrived on: 10/15/2009

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