Overdraft Protection?


Overdraft protection on your checking account/debit card

Banks are constantly looking for ways to get more fees out of you. Ever since the collapse of the banking system and housing market, they have been adding fees for just about everything it seems.

One of the things they want you to do to keep you from being embarrassed or something like that, is to sign up for overdraft protection on your checking account. This includes your debit card.


Simple – they can charge more fees that way.

Here’s how it works. If you sign up for overdraft protection, you can use your debit card or a check and write it for more than you have in your account. They will cover the cost up to a certain amount and then charge you a fee for the privilege. Sounds like a deal right?

The way the bank words it is that if you can’t keep up with the balance in your checking account and write a check for more than you have in there, then it will cost you $25-35 in bank fees. There are also additional fees from the store or restaurant that you wrote the check or used the debit card.

First off – why aren’t you keeping track of the money in your account?

Since people are using checks less frequently, let’s focus on the debit card for a minute. With overdraft protection, the bank will pay the debit charge for you. So what’s the harm?

The harm is that it’s basically a short-term loan that you have to repay with interest. Can you say “extra fees?”

What if you don’t get overdraft protection?

If you read their statements about overdraft protection, here is what it says about not having overdraft protection.

If you do not opt-in, beginning after a certain date, the overdraft services won’t apply. The transactions will be declined if you don’t have enough money in your account. You will also not be charged any overdraft fees. Did you hear that? If you do NOT have overdraft protection, there are no fees and the card is simply declined.

So, on the occasion where you do not keep track of your balance (I can’t believe you would not keep track of it), if you try to purchase something and do not have the funds, the card will be declined and you won’t be able to buy the item.

Can you say – no brainer?

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