Chicago Bankruptcy Lawyer Blog

When gift cards surpassed traditional presents in popularity, I knew it was only a matter of time before we started just giving cash. And then, just as I predicted, the prepaid debit card arrived.

It's sort of the equivalent of cash, but more convenient than carrying around a wad of bills (and less awkward than gifting said wad of bills). Unlike a gift card, you don't have to guess whether the recipient likes a particular store. Heck, you don't even have to give prepaid debit cards as gifts - more and more folks are buying them for personal use.

As banks like to advertise, you don't even need a bank account or good credit to take advantage a prepaid debit card. Just load the card with your paycheck and spend. Convenient, huh? Unfortunately, it's a little too convenient.

Most of these prepaid cards come with ridiculous hidden fees - take the activation fee, for instance. I mean, why would you buy a card if you weren't going to use it? And that's not all, according to the New York Times.

Continue reading "Why Prepaid Debit Cards Might Not Be Such A Good Deal" »

Big banks don't like to be told what to. So with the news that federal regulators are considering legislation to control overdraft fees, a couple of the financial companies took matters into their own hands.

Bank of America and JPMorgan Chase recently announced that they would reduce the maximum number of overdraft fees - the outrageous penalties banks charge when you overdraw with your debit card - that a customer can incur in a day. Even better, they'll make it easier for customers to choose whether to opt in to the overdraft protection program. Currently, bank customers are automatically enrolled and aren't allowed out except in very special circumstances.

But how much of a difference will it really make? It depends.

Continue reading "Big Banks Revise Debit Card Fees, But Does It Help?" »

Since when does a cup of coffee cost $40? Since banks started using debit cards to make profits off their customers.

In the past few years, consumers have increasingly turned to debit cards and cash rather than credit. It makes sense - most Americans are carrying some sort of debt burden and we don't want to keep adding to it. We're tired of shelling out our hard-earned income to creditors; we want to take back control of our money. But banks aren't about to let us find financial freedom without a fight. They've begun capitalizing on this new trend with a little thing they call overdraft protection.

Let's say you use your debit card to buy a $4 drink at your favorite coffee shop. Now let's say you had put your paycheck in the bank a few days ago and, unbeknownst to you, it hasn't officially cleared yet. Your debit purchase will go through without any warning and you won't know that anything has happened. That is, until you look at your next bank statement and see that you paid $44 total for that caffeine fix, thanks to your bank's overdraft protection program.

Continue reading "Even Small Debit Cards and ATM Withdrawals Can Lead to Big Fees" »

When I first discovered the wonders of the debit card, I thought I was in heaven. Here was a form of payment as convenient as credit, yet seemingly as safe as cash.

Unlike paper money, it didn't require me to plan a trip to the ATM. But unlike credit, it didn't charge me interest or encourage me to spend beyond my means. I used it at the grocery store, the gas pump, the coffee shop - anytime I didn't have cash but didn't feel like adding to my debt. It seemed too good to be true. Turns out that it almost was.

One day I opened my bank statement and my jaw about dropped to the floor - what should have been a $5 charge for coffee and a muffin appeared as $35. Apparently, I had accidentally debited my snack before my paycheck cleared and my bank decided to make a pretty penny off my error. How did they do it? Through overdraft protection.

Continue reading "Debit Can Help Rein In Debt As Long As You Don't Overdraw" »