Credit Cards As Overdraft Protection
A large percentage of the population is currently struggling to keep up with their debt repayments. To err is human, though, and it is not uncommon for someone to make a simple mistake that ends up costing big bucks! You already know that making a payment a day or two late will result in a late fee – often one that is higher than the minimum amount owed on a credit card. If you make a late payment or skip a payment all together, chances are you will also experience an interest rate increase on that account – as well as any other credit card account you have (under the Universal Default clause).
Even when someone writes checks and makes their payments online before the due dates, the potential for an error is possible – and a simple mathematical error in a checking account can accumulate expensive overdraft fees. If you have ever made an error in your check register, you know how quickly overdraft fees can add up! It takes awhile to receive notification of your error from the bank – and in the meantime, if you do not realize the error has been made, you could continue to spend more money than you have available – particularly since each check or transaction that takes place once a checking account is “out of money” results in an additional overdraft fee ($20 to $40, depending on the bank’s policy).
