Friday, November 20, 2009

The $40 cup of cappuccino....'d think at $40 a cup, it'd have to be the finest coffee fit for the connoisseur. Wrong.

The coffee turned out to be a regular one at Seattle's Best for $5...and on top of that, a $35 bank fee on an overdrawn debit card!

The long story goes like this...we had opened two accounts with one of the biggest banks in New England - one checking and the other a savings a/c. And we were each given a debit card which is not any different from the ATM/NETS/DEBIT cards that we have in Singapore.

The checking account pays very little or no interest whereas the savings account does. So obviously, we place most of our money in the savings account with very little going into the checking account - just about enough to cover our rent, utilities and other expenses.

We don't qualify for a credit card yet 'cos we are new to the states with zero credit history. So the only cards that we have are the credit cards from back home and the one and only debit card from our bank here.

In the states, people use their cards for every big and small purchases. I hardly ever see money changing hands at the cashiers. When we first arrived in the states, we used to pay cash for our purchases (in $100/$50 bills) and I often got weird looks from the cashiers and once, a snide comment from a shopowner who asked if my $100 note was real! So when we got our first debit card, we decided to go cashless like everybody else...and it's also easier for us to track our expenses that way without having to keep every single piece of receipt as every single transaction made using our debit card will be recorded and reflected in our monthly bank statement.

We ASSUMED that the debit card here is just like in Singapore. You are allowed to charge on your debit card only for the amount that you have in your bank account. WRONG! Then we ASSUMED again that the debit card is linked to the savings account like back home. WRONG AGAIN!

The debit card is actually linked to the checking account in which we have placed very little money in. And over here, the banks are SO KIND to allow you to overdraw on your debit card even if you don't have $ in your checking account.

So for the first month, we swiped our debit card like nobody's damn business as we needed quite a lot of stuff to settle in. We didn't realise that after our check for the rent (first/last month + 1 week rent) was cleared, we were actually left with very little money in our checking account. And also, not having realised that the debit card is linked to our checking account instead of our savings a/c where all our money is, we overdrew on 4 occasions (in a single day) until we found out about this by chance when we went to the bank to make a wire transfer to New York. We were slapped with a $140 bank charge on 4 overdraws! That was when we realised all our assumptions were dead wrong.

So we went to the bank branch where we had opened our accounts with and explained to the AVP that we were genuniely unaware. She was reluctant at first but she eventually agreed to waive the $140 bank overdraft fee. So I asked her how the banks could ever allow for such overdraft facilities without checking with us or informing us at the very least? And who on earth would pay $35 per overdraft? And she said that's how the banks here work and that's how they earn money. She also said some people would rather pay the bank overdraft fee than be put in an embarrassing situation when the purchases don't go through. But seriously, a 700% interest on a $5 cappuccino just to save some face!!! Purrr-lease...our face is really not worth that much.

Anyway, this overdraft facility also applies to checks. And the sneakiest part is....say if you were to write 4 checks for varying amounts - $900, $50, $20 & $10 and there's actually only $901 left in your checking account....rather than clear the $50, $20 & $10 checks first and then charge you an overdraft fee of $35 on the $900 check ($79 overdrawn) ($901-$50-$20-$10-$900 = -$79)...the banks would clear the $900 check first and then charge you $35 x 3 = $105 for the other 3 small checks.

I hate to say this...but even the loansharks back home seem like much nicer people now.

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