Overdraft Protection is NOT A Line of Credit!
I’m writing this with gritted teeth, because I am so insanely mad at myself over the whole overdraft protection thing. As I mentioned in my last post, Mommy Dearest has saved my butt on this issue numerous times of late, as I’ve been a jobless college student spending an ungodly amount of hours on public transit everyday because I’m too broke to own a car. Oh, wait, this is all a good thing, because I’ll be graduating debt-free! (If I can learn to control my bank account before then.)
For me, I have never consciously used my ATM/Debit card when I knew I didn’t have enough (or any) money in my bank account. All the times I’ve overdrawn have been because I didn’t have an accurate perception of how much money was actually in that black hole. Needless to say, when I overdraw my account, nine times out of ten I am overdrawing by a few dollars. For which I have to pay $27 in fees. Which pisses me off.
Since opening a bank account in my own name all of a month ago, I’ve overdrawn twice, and both times were on accident. (Do you see a pattern here? Someone needs to start writing down all her purchases!) So now I have a crapload of fees to pay because I bought something a few bucks over my limit. Ugh. I need to start thinking about a getting a secured credit card so I can begin to be rewarded for spending other people’s money. Responsibly, of course.
Now there’s a savvy college student.
Erin,
We’ll you are certaintly way ahead of things as compared to me at your age. Kudos to you!
When I used credit cards in college, I remember having issues with the annual fees. Those can overdraw you too if you’re not expecting them. Always good to force the issue over the phone and make those “hidden fees” more transparent.
Now, graduating debt-free. That is a truly significant accomplishment! Although I have no consumer debt, my educational debt is really like a mortgage for a house I’ll never live in and a Fairfield County, CT mortgage at that! I suspect I will be living out most of my adult frugally (but happily). As the old adage goes, we are the choices we make/are forced to make and, looking back, now in my thirties, education was the best investment I could have ever made, the limitations of the debt factored in and accounted for. That you managed to get through college without the debt is simply fantastic.
Good luck to you!
$27? I get charged $40! It’s insane, isn’t it? And the banks act like they’ve done you a favour.
Credit cards can be lifesavers.
Oh, except when you’re near your maximum limit and you go overcharge it and you get an overlimit fee of $40. Lol.
I think college is a good time to get a small credit card that you’re not really going to use. Maybe not an issue since you are still living at home, but college was the first time I was traveling a lot (I had a scholarship for a team that traveled 2 – 3 weekends a month for competitions), and my parents actually suggested I get a credit card just in case something happened while I was out of town and I needed a emergency flight home, had a medical emergency, or some other parental nightmares happened. Thankfully I never had any emergencies but it gave me and my parents some peace of mind. I ended up just charging something small, like gas, every so often and paying it off right away, and so I had good credit at a young age by doing virtually nothing.
Erin, what I have done (starting in college) is write myself a check for a ‘stash’ amount – say $100. Stick that check in your dresser drawer, but subtract it out of your register.
When you balance your checkbook, show it as an ‘outstanding’ check and then try to forget that you have that ‘extra’ money in your checkbook. Basically, you are providing your own overdraft protection.
If it’s always ‘little’ amounts that get you into trouble, this can help. But you are right – the long term fix is to start writing your purchases down EVERY time. Including those “ATM withdrawals’, ‘auto draft’ and ‘VISA debit’ charges (that one is my main way to mess up – I forget to write down my online purchases).
Best of luck and congrats on the ‘no student loans’ – you’re starting out ahead of 90% of your peers.