WalletPrep

PrintBack to the lesson

WalletPrep worksheet · Money basics

How to avoid bank fees

Name ____________________ Date __________

Key ideas

  1. Debit card overdraft fees need your opt-in. Banks can't charge overdraft fees on ATM withdrawals or one-time debit card purchases unless you agreed to it.
  2. Small overdrafts can cost more than the purchase. In the example, $88 of purchases with $40 in the account brings $105 in overdraft fees.
  3. Monthly fees are optional. Many banks and credit unions offer checking with no monthly fee and no minimum balance. Switching takes about an hour.

Vocabulary

Credit union
A not-for-profit financial cooperative owned by its members, offering checking, savings and loans much like a bank.
FDIC insurance
US government protection that repays your deposits if an insured bank fails, up to $250,000 per depositor, per bank, per ownership category.

Work it out

Priya has $40 in checking and is opted in to debit card overdraft coverage. Her bank charges $35 per overdraft. Before payday she buys groceries, coffee and gas.

  1. Starting balance
  2. Groceries
  3. Coffee
  4. Gas
  5. Balance after purchases
  6. Overdraft fee 1
  7. Overdraft fee 2
  8. Overdraft fee 3
  9. Balance after fees

Check yourself

  1. You have $20 and make two debit purchases of $15 each. Your bank charges $34 per overdraft and you are opted in. What do you pay in fees?

    • A. $0
    • B. $10
    • C. $34
    • D. $68

  2. Without your opt-in, which can still bring an overdraft fee?

    • A. An ATM withdrawal
    • B. A one-time debit card purchase
    • C. A check you wrote

  3. What is an NSF fee?

    • A. A fee for a payment the bank refused for lack of funds
    • B. A monthly account fee
    • C. A fee for using another bank's ATM
    • D. A fee for paper statements

Your turn

Log in to your bank and find two things: your overdraft opt-in status and the monthly fee on your checking account. Opt out of debit card and ATM overdraft coverage, and set a low-balance alert.

www.walletprep.com/learn/bank-fees/ · Free to print, copy and share for non-commercial classroom use.

Answer key

How to avoid bank fees

Work it out

  1. Starting balance$40
  2. Groceries− $52
  3. Coffee− $6
  4. Gas− $30
  5. Balance after purchases= -$48
  6. Overdraft fee 1− $35
  7. Overdraft fee 2− $35
  8. Overdraft fee 3− $35
  9. Balance after fees= -$153
  1. Her purchases total $52 + $6 + $30 = $88, so she runs $88 − $40 = $48 short.
  2. Each purchase overdraws the account, so she pays 3 × $35 = $105 in fees. Her $88 of shopping costs $88 + $105 = $193.
  3. Opted out, those card purchases could not carry an overdraft fee. Most would be declined, and her fees would be $0.

Check yourself

  1. C. $34 The first purchase leaves $5. The second overdraws you by $10, so one fee of $34 applies.
  2. C. A check you wrote The opt-in rule covers ATM and one-time debit card transactions. Checks and recurring payments are not covered.
  3. A. A fee for a payment the bank refused for lack of funds NSF means nonsufficient funds. The bank returns the payment unpaid and charges a fee.