Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.

People in financial difficulty who can no longer use their credit cards, or those emerging from bankruptcy who do not have the cards to use, have been turning to debit cards as an alternative. However, when not used responsibly, debit cards can get you into financial trouble just like credit cards.

How Debit Cards Can Cause You Trouble

This is because of "overdraft protection" programs offered by the banks that allow you to use the card even when such purchase would leave your bank account overdrawn. Why? Because the banks can charge fees for it!

That fee, which can be up to $35 every time the card is used, can result in a much higher cost for the purchase than was originally intended, thus digging you further into a hole.

But You Can Avoid That Trouble!

However, as reported in the Huffington Post, that has come to an end. Prior to August 15, 2010, banks could automatically enroll their customers in the service. Now, unless a consumer chooses to opt-in for overdraft protection, their ATM and debit purchases will be declined if an account has insufficient funds.

Potentially embarassing, yes, but better than the financial problems it could cause. This is the second step in an effort to curb banks who have been profiting from careless use of these cards. Starting July 1, 2010, they were prohibited from automatically adding new customers to overdraft protection programs.

This latest Federal Reserve rule takes it a step further by dropping the service for existing customers who never asked for it.  This rule may make the use of debit cards more effort, but it is certainly worth it in the long run.

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