9780345511591

The "New York Times"-bestselling author of "Gotcha Capitalism" strikes again to help readers evade the financial traps big businesses set for unwary consumers--and shows how to get the best possible deals every single time.

Bob Sullivan has been a reporter for nearly two decades. For the past twelve years, he has covered computer crime and consumer affairs for MSNBC.com. Today his work appears on MSNBC.com's "Red Tape Chronicles" blog. He also appears regularly on MSNBC television, NBC Nightly News, the Today show, and various local NBC affiliates. He is the winner of the prestigious 2002 Society of Professional Journalist Public Service Award for a series of articles on online fraud. His first book, Your Evil Twin: Behind the Identity Theft Epidemic, investigated the root causes of credit card fraud and other identity-related crimes. His second book, Gotcha Capitalism, exposed the hidden fee economy that attacks family budgets. He lives in Maltby, Wash. with his golden retriever, Lucky.

What is included with this book?

The New copy of this book will include any supplemental materials advertised. Please check the title of the book to determine if it should include any access cards, study guides, lab manuals, CDs, etc.

The Used, Rental and eBook copies of this book are not guaranteed to include any supplemental materials. Typically, only the book itself is included. This is true even if the title states it includes any access cards, study guides, lab manuals, CDs, etc.

Chapter One

The Twenty-First-Century

Checking Account

I recently overdrew my checking account at Chase Bank by 60 cents, and my unemployment check was set to be electronically deposited later the same night. The overdraft would only exist for a few hours. The bank charged me $35 for a 60-cent overdraft. If this were interest, it would be 6000%, but since it is a fee, it is okay.

--Kate Hank,

a Red Tape Chronicles reader

Once upon a time, a checking account was simply for depositing paychecks and writing checks. As long as you noted the checks in a register, you were safe. If you bounced a check, it probably was your fault.

Those days are long gone.

Now, check writing is probably the least of your checking-account worries. Today, your checking account can be accessed at least six ways--ATM withdrawals, signature debit purchases, PIN debit purchases, online bill pay, and other electronic transactions such as wire transfers. And, of course, checks. In industry terms, your checking account has far more velocity now, making it far more vulnerable to hackers, and, more important, far more difficult to keep track of your balance.

The result? In 2007, Americans spent $17.5 billion making banks richer through overdraft charges, probably the most lucrative hidden fee in America. The notion of a free checking account is largely a charade. Banks created the overdraft phenomenon and stoke it by quietly adding features such as "courtesy overdraft protection," all the while tightening the screws more and more with each passing year. Overdraft fees now cost nearly $40 per transgression, and because the fees are often "stacked"--one overdraft leads to another, then another, and so on--one single lapse can easily cause a $5 hamburger purchase to ultimately cost $200. That means it's more important than ever to protect yourself, and your checking account, from heading south of zero.

It's not easy. There are other bank-designed booby traps, such as "Check 21." This new electronic processing system for checks means banks get your money instantly when someone cashes a check you write (no more "float"), but can still hold on to checks you deposit for long stretches of time (up to eleven days). In short, the money comes out much faster than it goes in. That's a recipe for overdrafts. Banks even vary by deposit type how quickly they credit your account when you deposit money. (Hint: At one major bank, online transactions are credited at 10:45 a.m. every day, in-person teller transactions aren't credited until 2 p.m., and deposits at newer ATMs don't make it until 8 p.m.!) Not knowing these rules can be costly.

But how would you know them? In 2007, 20 percent of banks were in violation of the Truth in Savings Act, a federal law requiring clear and conspicuous disclosure of their fee schedules. Quick: What does your bank charge for an overdraft?

In total, Americans donate $36 billion in fees to U.S. banks every year, or about $400 for every adult American. Virtually all of that spending is unnecessary. Anyone using the right tricks can have checking and savings accounts for free. This chapter will show you how.

BALANCING YOUR CHECKBOOK MONTHLY?

NO, DAILY

You'll hear plenty of old-fashioned advice about balancing your checkbook to prevent accidental overdrafts. If you're the type to do that every month, God bless. Software can help, too. But balancing a checkbook today is so much harder than it used to be; and even a monthly balancing won't really protect you from the $39 overdraft fees I'm talking about. Anybody can make a string of unexpected debit purchases during a month of bad luck (but not if you follow my advice and don't make debit purchases). Anyone can misunderstand checking-account deposit-credit policies. Anyone can accidentally click twice while using online bill pay and suddenly find their accounts unfunded.

Checking ac

Excerpted from Stop Getting Ripped Off: Why Consumers Get Screwed, and How You Can Always Get a Fair Deal by Bob Sullivan
All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.

Amazon no longer offers textbook rentals. We do!

Stop Getting Ripped Off

Stop Getting Ripped Off

034551159X

Summary

Author Biography

Supplemental Materials

Excerpts

Write a Review