Do you remember using your bank card or credit card somewhere, and being mildly embarassed when the charge was refused because you had either overdrawn your bank account or gone over your credit card limit? Well, I hate to admit it, but I experienced that a time or two in my younger years, especially when I was on vacation.
However, I am much more aware of my bank balance or credit limits these days. And in fact, I try to avoid using credit cards whenever I can. However, I have learned that people do not suffer the embarassment of having charges refused as much these days. In fact, banks and credit card companies will let you overdraw your balance or go over your limit! Why do they do this?
Well, as soon as you overdraw your limit, you start getting slapped with fees, of course! Each one can charge $35, and these things tend to have a snowball effect. i.e. a $4.00 negative balance can cause an $8.00 check to cause a $35 fee. So of course, your next charges will cause more fees, and sometimes the fees can be more than the charges!
The same thing happens with credit cards, and it tends to get even more nasty. You not only have charges, overdraft fees, but your credit score can get dinged too!
So be sure and watch those balances, because it is easy to lose track when you are pulling out plastic. Also consider finding a bank that “forgives” a certain amount of overdrafts a year, or has an attached savings account that kicks in. But be careful of those too, because if somebody steals your card, you can lose yoru savings a long with your checking. Personally, I’d rather just risk my checking account, and leave my savings account secure.
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