Almost everyone has a debit card these days. They’re a really convenient way to pay for things, directly out of your checking account, but be careful! The truth is banks are counting on you to spend more than you have. Here are some of the facts.

Banks market it as “overdraft protection.” Let’s say you buy a $50 shirt, but you only have $40 in your checking account. No problem, they’ll cover you! For a price – an overdraft fee that’s usually around $35! These fees have become a huge source of income for banks. This year, they’re expected to bring in $27 billion by covering overdrafts on checking accounts, mostly from debit card purchases. In fact, banks now make more from overdraft fees than they do on late payment or over-the-limit fees from credit card holders.  

Debit cards can end up costing you way more than any credit card, because not only do banks not warn you when you’re overdrawn, some rearrange the order of your purchases so you rack up even more fees! You might buy a $3 coffee on a Monday, which you can easily cover. However, on Tuesday, you spring for a $200 cell phone - which adds up to more than you have in your checking account. Well, banks will often process that big purchase first. So instead of paying one $35 overdraft fee – for the phone – you get stuck paying two overdraft charges on the phone and the coffee, too! Halperin says that most of the largest banks automatically cover debit overdrafts, and that ultimately, people are responsible for keeping track of their own finances.

So be careful, and if you happen to overdraft your account, don't be afraid to talk to the bank manager to get the fees reversed.  If you do not habitually overdraft, they will usually help you out.