Protect Your Own Money: 4 Steps for Responsible Consumers

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As some of you may know, the Federal Reserve recently banned overdraft fees for ATMs and debt card purchases. Starting in July 1, 2010, customers will have to choose to opt-in to overdraft protection or else they will be denied at the register if they attempt to purchase an item without enough money in their account. Banks will also be required to make the details of the overdraft fee protection available and clear to the consumer.

At first, this appears to be a big hooray for the consumer. But the more I thought about the move, the more I disagreed with its intended motives.

I hope no one is sitting at home reading this news and pumping their fists in triumph that they can now be more reckless with their debit card. The people that are going to benefit from this new legislation probably aren’t paying too much attention to Congress’s recent bank laws and will more than likely not understand what they have to opt-in to come July.

This new legislation appears to promote irresponsibility on the part of the consumer.

Yes, banks can be tricky with their fineprint and it’s good that in July they will have to make these rules known to the consumer, but shouldn’t it be up to the consumer to watch over his or her money?

Banks are a business. They’re for-profit. They’re providing the consumer a service so why should they have to bend over backwards for the consumer?

There are certain situations where good people have gotten screwed over by a bank. I realize this happens and I don’t applaud banks for these instances of poor business. But we have to take a look at ourselves and wonder if new bank legislation against overdraft fees is really a gigantic financial step in the right direction, or just a temporary break from the overreaching problem that Americans tend to be irresponsible with their money.

Consumer responsibility needs to be stressed and that starts with you and I and how we handle our everyday finances. The Federal Reserve shouldn’t have to protect us from our poor habits; we should be the one’s protecting ourselves. Here are four ways to become a more responsible consumer:

1) Know your cards, numbers, and pins

Take an inventory of your current debit and credit cards. Write down the type of card, its numbers, expirations, and security codes and place that document in a safe place. If you ever lose a card or have troubles with fraud, you’ll be able to quickly have the situation fixed with access to this information.

Keeping an inventory is crucial in case you lose a card and you don’t realize it for a couple of weeks. Instead of racking your brain to remember which card it was, check off the ones you have and that’ll lead you to the missing card. It’s responsible to know what you have in your pocket, and these details will allow you to understand your financial situation that much better.

2) Know your card balances

Almost every bank has a decent enough website that allows you to check your balance. Also, if you’re questioning how much you have in your debit account at the register, take five minutes and give your bank a call. The phone number is on the back of your debit card and they’ll be able to tell you how much you have in your account. This two minute phone call will be worth it if it’s going to save you a $35 overdraft fee.

The same goes with credit cards. Interest rates sky rocket if you go over your credit limit and it’s possible that that one occurrence will affect your credit for years to come. It’s not worth the mistake, so pay attention at all times. If you have the internet on your phone it’s even easier as you can check your current limit right at the store.

If this still isn’t enough, leave the card at home if the balance is too low. Don’t risk it and purchase an item with hopes that you have enough in your account to cover it. A lot of overdraft fees occur because of purchases like candy bars or a cup of coffee. Give the card a day off when it’s running low, and you’ll avoid th temptation to risk the purchase.

3) Use your money wisely

Too many people have large sums of money sitting in zero-interest checking accounts. With online savings accounts like ING your money is fairly liquid and you’ll get some interest out of it. Keep a safe buffer sum in your checking account to avoid any chance of an overdraft, but transfer the rest to an online bank. It’s also much safer to have your money spread out over different accounts. If all of your cash is in one checking account, all it takes is one lost debit card and someone could cash in big on your mistake.

4) Realize banks aren’t your best friends

They may give you free hot choloate and suckers when you’re filling out your deposit slip, but they’re trying to make money off of you. You have the right to question their practices, say no, or move your money elsewhere if you’re not satisfied. If they offer you a product that would be in your “best interests” you don’t have to agree.

When Corinne and I had our book business in college we opened up a checking account at the local bank – a very popular bank. One of the worst banking experiences I ever had was when I went in to deposit cash and a sleezy account man with his bank’s logo on his tie took me into his office and tried to sell me a mortgage. This was just a couple of months after the financial meltdown and they were desaperate for any action, but that fifteen minute exchange left a very sour taste in my mouth and I’ll avoid that big-name bank because of it.

They may act like your friend, but they’re not. Pay attention to the details on your accounts, the charges on your statements, and take inventory of what’s in your wallet.

America needs consumers who are watching out for themselves, and taking these small steps will allow you to be that much more responsible and safe with your money.

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Do you think the Fed needs to protect consumers? How do you protect your money? And what’s your debit card number? Just kidding!

Photo by dianaoctavius


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