Because debit cards deduct money directly from the cardholder’s bank account, it’s not possible to pile up debt like you can with a credit card. But debit cards are not without risk: Overdraft fees, which card issuers assess when customers spend more than the balance in an account, routinely cost $35 a pop, in some cases adding up to thousands of dollars per year.
Banks that charge such fees don’t call them as such. They call the practice “overdraft protection,” as in they’re protecting you from the humiliation of getting your debit card rejected. But isn’t it better to suffer a slight embarrassment than to feel like a sucker for unnecessarily forking over $35 fees regularly to the banks?
Legislation is being introduced to at least make it more difficult for banks to hit customers with these fees, according to the Washington Post. Right now, these fees are typically added to accounts automatically, without ever asking the customer if he or she wants such “protection.” A bill pending in the house will do the right thing and force banks to ask the customer if he or she wants to be protected at a clip of $35 apiece. How many customers do you think will opt in?