Higher Fee Loopholes

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With the new regulations now firmly in place, including the CARD act and the new financial reform bill that is on the President?s desk, the banks are no longer able to charge some of the excess fees that they were used to. Consequently, the profits are down and they are looking for ways to increase the fees that they can charge.

Here are a few things that you should be aware of as you are navigating with the new rules.

? Overdraft protection. You have probably received notice after notice after notice that the banks will no longer allow you to overdraw your account on a debit transaction unless you opt-in. Instead you will be left at the checkout with your debit card in hand and a denied sale. Embarrassing, yes. But worth opting in to be overcharged an overdraft fee? Maybe not. But if you don?t opt in it does not mean that you can?t overdraw your account as this only applies to debit card transactions and you can still write a check and you will pay a fee equivalent to an overdraft fee.

? Should you link your checking account to your credit card rather than risk paying overdraft fees? Only if you pay off your credit card every month. An overdraft charge to your credit card is treated as a cash advance and the APR is typically higher for cash advances than for regular charges.

? Raising interest rates. The banks and credit card companies are now required to notify you at least 45 days in advance of a rate change and offer you the opportunity to accept the rate change or close the account (isn?t that a catch-22?) unless you have a variable rate card, which many cards are these days. On a variable rate that is charged to an index, the rate goes up and down with the index and you will not be notified.

? Only payments made that are above the minimum are applied to the highest interest rates first. Minimum payments go to the lowest interest rates first.