That cup of coffee could cost you $35

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(Source: 3TV/CBS 5) (Source: 3TV/CBS 5)
PHOENIX (3TV/CBS 5) -

A technique used by some banks to maximize overdraft fees could be costing customers hundreds of dollars every month.

"I think a lot of consumers now are opting into overdraft protection when using their debit cards and perhaps not realizing the pitfalls," said Jim Triggs, who is the senior vice president of counseling for Money Management International, a nonprofit that educates people about finances.

Triggs is referring to something called "high-to-low" transaction shuffling, or "debit shuffling." It occurs when a bank purposely processes high dollar debits before lower dollar debits, in an effort to maximize overdraft fees. Those fees often run as high as $35 per overdraft.

Here's how it works:

Let's say you have $50 in your bank account. You buy a coffee for $2 at breakfast, a hamburger for $10 at lunch, then you spend $55 at the grocery store at the end of the day. At that point, your bank balance is -$17. If the bank processes the transactions in chronological order, you would have one overdraft fee for the grocery bill.

But some banks shuffle your debits so the highest expenses are taken out of your account first. In that case, the bank would debit the $55 grocery bill first. At that point, your balance would be -$5, so you would have separate overdraft fees for the groceries, the hamburger and the coffee.

According to a brief published by the Pew Charitable Trusts, roughly 40% of banks do some form of high-to-low processing. You can find out what your bank's policy by asking a bank representative, or by clicking here to see the Pew study.

Experts like Jim Triggs with Money Management International suggest that customers not "opt in" to using overdraft protection. If they do use it, they recommend linking it to a savings account, which is likely to be free of charge or carry a reduced fee.

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Morgan  LoewMorgan Loew is an investigative reporter at CBS 5 News. His career has taken him to every corner of the state, lots of corners in the United States, and some far-flung corners of the globe.

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Morgan Loew
CBS 5 Investigates

Morgan’s past assignments include covering the invasion of Iraq, human smuggling in Mexico, vigilantes on the border and Sheriff Arpaio in Maricopa County. His reports have appeared or been featured on CBS News, CNN, NBC News, MSNBC and NPR.

Morgan’s peers have recognized his work with 11 Rocky Mountain Emmy Awards , two regional Edward R. Murrow Awards for investigative reporting, an SPJ First Amendment Award and a commendation from the Humane Society of the United States. Last fall, Morgan was inducted into the National Academy of Television Arts and Sciences Silver Circle, in recognition of 25 years of contribution to the television industry in Arizona.

Morgan is a graduate of the University of Arizona journalism school and Concord Law School. He is the president of the Arizona First Amendment Coalition and teaches media law and TV news reporting at ASU’s Walter Cronkite School of Journalism and Mass Communication.

When he’s not out looking for the next big news story, Morgan enjoys hiking, camping, cheering for the Arizona Wildcats and spending time with his family at their southern Arizona ranch.

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