by Jaynee Sasso
Understanding “predatory lending” is essential in order to protect you and your family from its devastating effects. Typically the term “predatory lending” is only associated with the unethical loan officer who gives an unassuming borrower a home mortgage with inflated fees, teaser rates and undisclosed loan terms. However, your concern should not be limited to your mortgage lender, but also to the institution that you transact business with daily: Your local bank.
The increased use of debit and check cards over the past years has opened the door to abuse at the hands of many banking institutions—overdraft loans. Have you ever gone to make a purchase with your debit card and had the transaction approved only to find out that the funds really were not available, and that as a “courtesy,” the bank approved the transaction only to charge a hefty overdraft fee? It’s usually the same amount as a non-sufficient funds charge. Depending on how often you use your debit card, you stand the chance to pay $1–$3 in fees for every dollar borrowed. Typically, banking customers have not been given the option to opt out of this “overdraft protection” plan. However, recently more banks have begun extending this option to their customers.