Overdraft fees. A phrase that strikes terror into the heart of any college student, domestic or international. It's an unnecessary burden, a multitude of payments that can drain your bank account of all your hard-earned money. But what exactly are overdraft fees? And why is it relevant to a college student?
With regards to the first question, overdraft fees are charges incurred when a person doesn't have enough money in their checking account to make a purchase and their bank or credit union, after covering said purchase, requires them to pay back the required amount in full.
With regards to the second question, they are relevant because it furthers the strain that is college expenses. According to an NBC News article from June 2017, the average student can rack up over $1,000 in overdraft fees during their four years at college ($1,016 to be specific). If you think that sounds bad, just wait 'til you hear this…
College students across the United States spend over $795 million in overdraft fees combined. But we digress.
Let's take a moment to do a little experiment. Find out how much your parents pay each year to ensure you further your education (preferably the total amount paid prior to the start of the recent academic year). Then add $1,016 and compare the original price to the current price.
It's a lot more money than you thought it would be, wasn't it? But don't worry. There are several measures (besides cutting back on your spending) you can take in order to prevent high expenses.
Our Recommendations For Fighting Overdraft Fees
1. Avoid signing up for overdraft protection services, as they will charge you fees for having such services. If you already have a checking account, see if you can opt out. By opting-out, a charge greater than your balance will be declined rather than allowed with a fee incurred in the process.
2. Set up alerts that will let you know if you have a low balance (Boro recommends keeping extra cash on hand to avoid this) and remind you when payments are due.
3. Ask a customer representative at your local bank about their rules regarding overdraft fees and see if they can be waived whenever you need to make a payment.
We hope this guide has been of help and inspires you to tell others about the ramifications of overdraft fees. Interested in setting up a Boro payment plan? Click here for personal loans, here for auto loans, and here to start your application.