Overdraft Protection and You

Are you using overdraft protection? Should you opt-in or disregard the new policy which comes into place as of August 15.

Previously if you had a charge that came in, the bank could pay it and charge you anywhere from $30 to $40 to compensate for overdrawing the balance. Now, from what I understand and this applies to new accounts opened after July 1 and it is effective August 15 for pre-existing accounts, attempted debit-card payments with insufficient funds will just be declined, unless users opt into the previously-automatic coverage, which banks liked to call “courtesy overdraft protection.

It is an optional service and SOME BANKS are spinning it as a MUST HAVE. This is not cheap. Look at this example I found of TD Bank which charges $35 per transaction that overdraws an account more than $5, up to five transactions per day. You pay another $20 if your account balance remains negative for 10 consecutive days.

Will you opt-in or not? I personally will continue monitoring our accounts very closely and not be hit with all these additional fees. As a matter of fact, I will be discussing with my husband some of these monthly expenditures that I believe we should get rid of that are not generating income for us and are tied to our businesses.

Remember, banks do not call you and say a transaction is about to overdraw your account. You generally find out after the affect. I remember last week a person posted on twitter that their account went over by $3 for the first time ever and their bank changed the APR to 29.99 percent. I recommended they contact their bank, basically plead their case based on their record and see if they would waive. Their bank declined saying there was nothing they could do. Let’s remember, they are there to make money and now they will make even more money off of this person if they do not monitor their account closely.