Avoiding the $42 hamburger: Unexpected Overdraft Fees vs. Short Term Advances

Thursday, July 9, 2009

The front page story in the July 9th issue of USA Today is headlined "Banks' courtesy loans at soaring rates irk consumers." Back in May, we wrote here about the $42 hamburger - a cheap burger garnished with an unexpected overdraft fee. Today's story gives a good profile of how consumers can rack up big fees by not being aware in advance that a purchase would trigger an overdraft.

PaychekPLUS! does not allow employee paycard accounts to overdraft - hence, we don't have overdraft fees. But we recognize that there are times when an cardholder could use a little money to tide them over to payday - and they are willing to pay a fee for the convenience. The key is allowing the cardholder to make the choice before the purchase. Few consumers would buy a hamburger, knowing it will trigger an overdraft fee, but for someone facing a late fee on a utility bill or needing gas to get to work for the rest of the week, paying a fee for a short-term advance could be a good decision.

That's why FSV makes available a micro line of credit that employers can offer their employees. The advance is not automatic - cardholders must call to request an advance each time - and they select the exact amount to be advanced, so they are not paying fees for more money than they need. FSV believes this is a responsible approach to providing short-term advances to meet the urgent needs of our customers.

Cathy Corby Parker
Executive Vice President