The Light Bulb Finally Came on

At least once or twice a week, I try to scan as many financial blogs as I can stay current with what's happening out in the personal finance world. In the "Stupid Tax" section of Dave Ramsey's site, I ran across this little gem about bank programs that are supposedly designed to help you, but in reality are another way for the banks to nickel and dime us so that they get rich.

If we just pay attention and become better managers of our finances, we won't encounter the type of problem that Sharon got herself into. Enjoy the article.

You can also view the original article here.


The Lightbulb Finally Came On

By Sharon in Houston

A few years ago my credit union created an overdraft fund of $500 to cover me. Seemed like a great deal.

In less than a year, I was hooked and used it every payday. I paid $29 each time and soon became "clever" enough to make sure I only incurred one $29 charge every payday. Rarely did I not use the $500 overdraft feature.

One day a lightbulb came on in my head: "Wait a minute. I'm paying the bank to play with the same $500 over and over and over." I added it up. The bank's generous initial investment was $500. I used this feature at least 24 times a year, so it cost me $696. Plus, if I had to guesstimate all the other times I incurred the fee (about 20), that part adds up to $580. So, to play with the same $500 month after month, year after year, cost me about $1,300!

For 2008, I broke free of this crazy program. I did it! I gave the bank their $500 back, and the service was removed from my account. No more going up to the $500 mark and taking the chance of going over, thereby incurring more than one $29 fee. No more running to the bank to get that last $500 and having to pay everything else with cash. No more paying the bank $1,300 a year for the "privilege."

My STUPID TAX for the past 3 years is at an end. Blessed be.