Have you ever been hit by a charge for accidentally withdrawing more money than is in your checking account? If so, you know these fees can be quite high. With holiday shopping at its start, the Pennsylvania Institute of Certified Public Accountants offers the following advice so you understand how these fees work and how to avoid them. The holiday season is expensive enough without adding fees and penalties.
The nuts and bolts
When you try to withdraw more money than you have in your account, some banks will refuse the withdrawal (which they do when they return a “bounced” check for insufficient funds) and charge you a bounced check fee. Others may allow the transaction and charge you a fee for the overdraft. This can happen if you write a check for more money than is in your account or if you make a withdrawal using an ATM or debit card for an amount in excess of your account balance. You might also be charged a fee if an automatic or electronic payment puts your account into overdraft status. When you open your account, find out about the bank’s policy so you are not surprised later.
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