When your credit card balance tips from positive to negative, there are often punishments involved. In fact, you can end up with exorbitant charges because of your failure to keep your balance up. Earlier this month Fifth Third Bank declared that they will be raising their overdraft fee to a high $37. This makes Fifth Third the bank with the highest overdraft fee in the nation. Their previous rate was only $4 less at $33. U.S. Bank will also be raising their overdraft fee soon. Though they previously only charged $10 for over drafting, they now plan to target over drafters with a hefty $35 payment.
Overdrafts occur when a credit card user charges more than he or she has in his or her account. Normally, the bank will still honor the purchase but they charge this fee for their services. These fees would be tagged on each overdraft instance that occurs on the account. Mobile banking apps have helped men and women to keep track of the balance in their accounts, but if they ignore how much is on their credit card and even spend a few dollars at a Starbucks, they can end up with a $40 drink by the time that the overdraft fee is satisfied.
Banks are partially dependent on these fees in order to make a significant. In 2011, these banks were able to generate $36.1 billion in fees from over drafting and other credit offenses. The Consumer Financial Protection Bureau was instated to protect people from high banking fees, and they have lowered overdrafts that were not covered by protection. For people who frequently overdraft, high fees can become crippling. At times, the fines can reach three to ten times the transaction per day. If you can’t avoid overdrafts because you don’t have enough money in your account, and you are over your head in debt, then maybe you should consider alternative financial options like refinancing or bankruptcy.