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Money Management International Improving Lives Through Financial Education
SUCESS NewsletterFinancial Education Newsletter
 
One in four will opt for overdraft protections

MMI Copywriter

By Kim McGrigg, MMI Community Manager

Recent legislation passed by Congress has changed how financial institutions will authorize and pay overdrafts associated with checking accounts. Although most overdrafts from paper checks and automatic payments will continue to be covered (for a fee), consumers must now opt in to authorize this service for ATM and debit card transactions made at a point of sale.

The National Foundation for Credit Counseling’s (NFCC) July online poll revealed that 26 percent of the 2,089 respondents intend to opt in to overdraft protection in spite of there being a fee charged for the service.

As of August 15, 2010, both existing and new customers of financial institutions must sign up for overdraft protection before the bank is allowed to charge the customer a fee for clearing the transaction. If consumers do not notify their bank or credit union, they will not be covered, thus no action is necessary by consumers who do not wish to opt in.

Industry studies show that the average overdraft fee charged by a financial institution is $27, with approximately half of the more than $37 billion generated in fees in 2009 coming from debit card and ATM overdrafts. Banks are anxious to retain these fees, with many having launched significant campaigns encouraging consumers to opt in. If you are less anxious to pay the fees, following are some ways to avoid the potentially costly overdraft protection:

  • Keep your check register current, recording all withdrawals and balancing often. Be sure to notate all ATM and debit card transactions along with any paper checks written on your account.
  • Link your checking account to your savings account. In case of an overdraft, the money will be automatically taken from your savings with little or no fee attached.
  • Pad your checking account by carrying a balance that you will not likely exceed. Most people spend a similar amount each month. If possible, keep an extra $100 in your checking account to cover unplanned expenses.
  • Utilize technology. If your financial institution offers it, sign up for email or text alerts that notify you when your balance is low.
  • Reach out to your creditors. If payment due dates do not coincide with paydays, contact your creditor and request a due date change. You may have to pay a little extra interest to cover the gap for the first month, but over time this step should help to organize your finances.
  • Get help managing your finances. Solving the underlying financial issue that resulted in the overdraft is the best option.

The actual July survey question and results are as follows:

Q: Consumers must now opt in to have their debit card purchases approved if the charge exceeds the balance in their account. Will you

A. Opt in to ensure that purchases will be approved even though a fee will be added on=26%

B. Opt out and risk being embarrassed at checkout, but save the fee=74%

Note: Money Management International is a member of the NFCC. The NFCC’s July Financial Literacy Opinion Index was conducted via the NFCC Web site from July 1-31, 2010 and answered by 2,089 individuals.

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Money Bunnies make learning fun

MMI just launched a free new online resource to teach kids about good money management: MoneyBunny.com.

On the site, children can explore the world of the Money Bunnies and jump-start their learning about wise financial choices. The site features four interactive sections to encourage good money management.

  1. Stories and podcasts - Children can read along with a podcast to two Money Bunny storybooks: Money Bunny Takes a Vacation and Brownie Wants a New Bike.
  2. Online coloring pages - Kids can add color and creativity to their favorite moments from the Money Bunny storybooks with interactive coloring sheets and the drag-and-drop color palette.
  3. Printables - Coloring sheets are also available as printable pages for offline learning.
  4. Resources for grownups - Parents and teachers can share their ideas and experiences when it comes to teaching money management to kids and find inspiration from others.

Explore MoneyBunny.com with your kids today!  

Money Bunnies


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The goal of our highly trained professionals is to arm you with the knowledge necessary to take control of your financial situation. Our online seminars stress the development of skills that can assure long-term success. You will gain the peace of mind that comes from improved spending habits, increased savings, and the wise use of credit. Take the first step toward financial wellness by enrolling in a Web seminar today!

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Frugal tips to ease back-to-school shopping expenses

 

Pretty soon school bells will ring and children will start a new school year. Now, many parents are in a mad dash to get their kids ready for back-to-school. While the start of a new school season is exciting for some kids, many parents are worried about the hard hit on their wallets. The anxiety of back-to-shopping shopping can be enormous for some parents due to the stagnant high unemployment rate and the ever-increasing cost of household goods.

Start your back-to-school shopping by making a list. Use the recommended or required supplies list from your child’s school and teacher. Use this opportunity to sit down with your child and go over the list. This will help both you and your child get organized and ready for back-to-school. Below are frugal shopping tips to help you stretch your dollar this season.

Look for special promotions. During this time of the year many stores are offering amazing back-to-school sales. Watch out for special promotions such as free-shipping and those “buy two for one” deals.

Do your shopping during tax-free days. These days usually last for an entire weekend in either July or August. This is a great time to buy t-shirts, socks, and school uniforms.

Reuse what you already have. Many school supplies such as backpacks, binders, and pens can have a second life. Take inventory of last year’s supplies to see what is left over and what can be reused. Also, school supplies from older siblings - that are still in good condition - can be passed down to younger siblings.

Shop at local consignment stores. The end of summer is when many thrift stores are getting great, gently used clothing. These stores offer amazing pricing for quality merchandise. Thrift stores have strict policies for accepting items so you don’t have to worry about buying anything damaged.

Finally, to save on back-to-school shopping it’s important to set a budget and stick to it. With proper planning, you can prepare your children for another school year without breaking the bank.

For more tips on raising a frugal family, visit MMI's new Youth and Money resources.


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Update your account balances online. When you receive your monthly statement from your creditors, login to your MMI account and update your balances. It is important that we have the most accurate balance information possible on file. 

If you would like more information about signing up for a Debt Management Plan through Money Management International, visit MoneyManagement.org.


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About Money Management International

Money Management International (MMI) is a nonprofit, full-service credit counseling agency, providing confidential financial guidance, financial education, counseling and debt management assistance to consumers since 1958. MMI helps consumers trim their expenses, develop a spending plan, and repay debts. Counseling is available by appointment in branch offices and 24 hours a day, 7 days a week by telephone and Internet. Services are available in English or Spanish. To learn more, call
866.530.9869 or visit MoneyManagement.org.


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