Most financial institutions offer overdraft programs for checking accounts, which for a fee covers a transaction where there is not enough in the account. However, this service can result in several fees before the next deposit is made. For debit cards, an overdraft fee cannot be charged unless you have agreed (“opted in”) to these fees.
To reduce or eliminate overdraft fees, these actions are suggested:
carefully track your balance; sign up for low-balance alerts
check your balance when making a debit card purchase; also consider other checks that may not yet cleared
do not opt-in to an overdraft program for your debit card, or opt-out if you are currently opted in; while your debit/ATM may be declined, you will avoid high fees
link your checking account to a savings account to cover overdrafts
contact your financial institution to determine if you are eligible for a line of credit or a linked credit card to cover overdrafts
compare account fees at other financial institutions
Counting every penny on your credit and debit card statements can help detect fraud
Most people looking at their bank statements would probably notice if their credit or debit card were used without their approval to purchase a big ticket item, and they would quickly call their bank or card issuer to report the error or fraudulent transaction. But consumers are less likely to be suspicious of very small charges, including those less than a dollar…which is why criminals like to make them.
“These transactions might be signs that someone has learned your account information and is using it to commit a crime,” said Michael Benardo, manager of the (Federal Deposit Insurance Corporation) FDIC’s Cyber Fraud and Financial Crimes Section. “That’s why it’s important to be on the lookout for fraudulent transactions, no matter how small.”
He added, “When thieves fraudulently obtain someone else’s credit or debit card information and create counterfeit card, they might test it out with a small transaction—like buying a pack of gum or a soda—to make sure the counterfeit card works before using it to make a big purchase. If this test goes unnoticed, by the true account holder, thieves will use the card to buy something expensive that they want or that they can easily sell for cash.”
While beneficiary, collateral, and fair market value are familiar to many, these terms can be especially confusing to those with limited English-language skills. In an attempt to assist various people, the Consumer Financial Protection Bureau has created the Newcomer’s Guides to Managing Money to provide recent immigrants with information about basic money decisions. These guides offer brief suggestions to those who are new to the U.S. banking system. The guides also include guidance for submitting and resolving problems with a financial product or service.
The Newcomer Guides include these topics:
Ways to receive your money, comparing cash, check, direct deposit, and debit cards.
Checklist for opening an account, to assist with starting a bank or credit union account.
Ways to pay your bills, providing guidance on whether to pay by check, debit card, credit card, or online.
Selecting financial products and services, providing assistance on deciding which financial services are right for various household situations.
Print copies of the guides can be ordered or downloaded. These publications are available to English and Spanish with additional languages to be offered in the future.
For additional information on money guides for newcomers:
Millions of consumers use prepaid cards for spending, saving, and managing their money. Card issuers offer diverse products to meet the needs of users and prepaid cards vary immensely across the industry. Such diversity is beneficial to consumers, provided that the overall quality of products is high and that providers continually strive to meet the needs of consumers.
At the same time, it is important at this point in the industry’s development to take stock of the quality of products in the marketplace and to encourage prepaid card issuers to pursue policies that actively improve consumers’ financial lives. Drawing upon the framework of CFSI’s Compass Principles and the definitions of quality articulated in the Compass Guide to Prepaid, this report assesses the level of quality in the current prepaid card marketplace and provides a set of benchmarks against which future progress can be measured.
Eighteen General Purpose Reloadable (GPR) cards are analyzed in this report. These cards collectively represent approximately 90% of the total GPR card marketplace and include the largest players in the industry, as well as a sampling of smaller programs with particularly innovative cards. To develop scores for the industry as a whole, these eighteen cards were assessed against the recommendations outlined in the Compass Guide to Prepaid. Quantitative and qualitative methods of analysis were employed to generate scores that accurately capture the quality of products in the prepaid card marketplace.
For additional information on the Prepaid Card Industry Scorecard, click here:
Have students research various fees associated with prepaid debit cards.
Have students create a short video that communicates actions to avoid fees for prepaid debit cards.
What are the main differences between traditional and prepaid debit cards?
Explain situations when people might use a prepaid debit card.
Are there certain age demographics that would use prepaid debit cards more?
Bank customers may now access ATMs without a debit card. Using a smartphone app, both a cash code (an 8-digit number) and the PIN (4 digits) will be required for cash. App customers may authorize another person from phone contacts to obtain money. The recipient will be sent a cash code to allow withdrawal of an approved amount.
Banks also offer a credit card “lock and limit” app to control security and spending. This feature is used to block overseas transactions where the card isn’t present. In addition, a small business app that can accept on-the-spot payments, create estimates and invoices immediately and help to manage cash flow.
For additional information on cardless ATMs go to:
This article explains why identity thieves want eight different numbers and also provides some helpful tips for avoiding identity theft. The eight numbers include:
1. Phone numbers
2. Specific dates (birth, college attendance, employment, etc.) and Zip Codes
3. PIN Codes
4. Social Security Numbers
5. Bank Account Numbers
6. IP Address
7. Driver’s License and Passport Numbers
8. Health Insurance Account Numbers