Bank Overdrafts And Using Transaction Registers
Overdraft protection is a service offered to account holders by banks. Account holders who do not use a checkbook register or checkbook calculator often do not know how much money they have exactly in the bank account. The idea is that when a customer tries to withdraw too much money through using a check card at a point of sale, for example buying groceries or a cup of coffee, the transaction is not rejected.
The way it works is that although the bank pays off the transaction, a fee is charged for the service. This fee is usually not disclosed clearly to the customers, except perhaps hidden in the conditions and disclaimers which is difficult to read or understand. The benefit to customers is that they get worry-free transactions but must pay a high cost for each one that uses overdraft protection.
Both regular customers as well as Congress was angry that this was happening. To them it was a sneaky way of making money off the customers, especially when the overdraft fee was $35 and the offending transaction was perhaps only a few dollars.
In response to the financial excesses of the early 2000s, Congress enacted legislation that would the overdraft protection program unless a customer opts in for it. In addition, federal courts have demanded that banks pay back their customers these excessive fees. But banks are vigorously contesting the ruling in higher courts.
The abolishing of automatic overdraft protection means customers have to watch more carefully how they spend their money. One way is to monitor the checkbook register or transaction register closely.
However, a more modern method of tracking finances is checkbook software. Although it is not as portable, it can be used to record transactions with greater detail. Past records are quickly retrieved with various search criteria, and transactions can be sorted in different ways.
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