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Beware of Overdraft Fees in Closed Accounts

Credit card users often choose to autopay their monthly credit card bills from a checking or online savings account . While this is a great way to make sure you never miss an on-time payment, it's important to remember that you could run into problems if you change banks, close your old checking account, and fail to remember you still have a recurring payment set up to draw on the account.

Most people don't realize that banks can actually honor recurring payments even if the account has been closed, which means you could get hit with a hefty overdraft fee on top of the amount you bounced. If you've closed the checking account and stopped monitoring your balance altogether, this could come as a huge surprise when you do finally receive notice.

To be sure you steer clear of overdraft fees and any other problems with recurring payments, it's always a good idea to open your new bank account first, change your recurring payments, and then monitor them for at least a month before closing the old account.

on Sun, 2010-07-25 17:00