It would seem that whenever there is a positive step in one direction to protect the consumer, whatever industry is being regulated tends to come up with an even greater plan to separate you from your hard earned cash. In this case, banks are worried about losing all the money that is currently collected in fees and penalties. To recoup this cash, many lending institutions are offering products like the “Direct Deposit Advance”. This lending product basically enables any consumer who has a solid relationship with their bank as well as a history of direct deposit to “borrow” up to $500 instantly. The name may vary from bank to bank, however the concept is the same, you borrow money in a pinch and pay approximately $10 per every $100 you borrow. The money is repaid automatically when your next direct deposit hits the bank. Depending on how soon after the advance your paycheck arrives, you will be paying the minimum of 120% APR, in some cases much, much more.

When you look at it in those terms, these “advances” are similar to payday loans which have historically charged extraordinarily high interest rates. In addition to high interest rates, both types of loans can all too easily create a cycle of indebtedness that is often almost impossible to escape. When you are borrowing against money that you do not yet have, you will more than likely have to continue the process in order to continue paying bills and other living expenses. If you are unable to repay either type of “loan” you can end up paying obscene penalty fees in addition to having to repay the loan plus interest.

These terms could be considered almost criminal and consumers are urged to think twice before agreeing to any products offered by their bank which come with such a high price tag attached.

Banks Offer New Products To Offset Overdraft Regulations was created by and is property of American Consumer News.

 When creating a new financial plan, you should consider keeping your traditional credit cars strictly for emergency and credit boosting purposes. Plan only to use your debit card that links directly into your bank account and nothing else for purchases. You will be less likely to overspend as you would with a credit card with a higher credit limit. Debit cards only allow you to spend what you actually have in the bank. You may be more cost-conscious knowing you have cash limits instead of a line of credit.

 If you use your debit card like a credit card, it is essential you keep up with your purchases and stay on top of your expenses in your checkbook. This is especially true if you were not very adept at tracking your spending when you used credit cards and found yourself in over your head in credit card debt. Do not rely on online bank statements either. The online statement does not always show an accurate view of your real time account information and can lead to overdrafts, which often carry harsh fees. Can you imagine purchasing a pack of gum for $35? Well, it is possible if that gum purchase puts you over the amount of available funds you have in your account. It would be wise to talk to your bank representative to have an overdraft protection plan put into effect, should you accidently go over your limit. Overdraft protection can come from a linked savings account you have at the bank. Some banks may still charge a fee, usually smaller than an overdraft penalty, for the convenience of the transferring of funds.

 If you honestly know that balancing a checkbook is not your forte, make a point to have an unrecorded cushion of money that you do not factor into your checkbook balance. For example, if you have $500 in your checkbook, subtract $100 from the balance in your checkbook but do not withdraw the money. Make a note to yourself that the $100 serves as a cushion so you will have reference in the event you forget what you’ve done. Use your monthly banks statements to check your work each month and only rely on your online statements to check on available funds.

 Using a debit card instead of a traditional credit card, can help you considerably to manage your money. Learning how to track spending and keep tabs on how much you are spending is key to gaining financial freedom, as well as practicing good financial management.

Stay Out of Debt Using Your Debit was created by and is property of American Consumer News.