|
March 19th, 2008
How is your money situation? Is there ever a month where you are afraid that you might bounce a check? If there is, then you will want to look into overdraft protection at your bank. This protection can really be helpful to your finances and the bills that you have to pay each month. The following is a little bit about the basics of overdraft protection plans.
How Does it Work?
First of all, you need to have both a checking account and another account with the same bank. This other account can be a savings account, a line of credit, or a credit card. If you were ever to overdraw your checking account, you will still have your bill paid. But the funds that could not be covered from your checking account will now be taken out of your other account. It works just like a backup system; as long as your other account still has funding then you will never miss out on a bill. There will still be a fee, but this fee will be a lot less then an unpaid bill fee. You won’t be liable for a bounced check fee. But make sure you sign up for this, because you will not automatically get it when you sign up for the account.
Problem with this Protection
Even though you have this protection there is no guarantee that your payment will be made each time. There is generally an amount that can be overdrawn in your account, and this stands between $100 and $1,000.. If you try to overdraw more than that then there is a chance the bank might not want to pay the check. Hopefully this is not a problem, because odds are that you probably won’t be going over $1,000. You also need to see if there is a short window to repay overdraft fees. This could be as short as two weeks.
Overdraft Privilege
Overdraft privilege is a form of protection that you do not even sign up for. This is just initiated by banks to give you coverage if you overdraw your account. This is not linked up with any of your other accounts. That is the main way you can tell the difference between overdraft privilege and overdraft protection. So know that this is not the same and you need to look into how it works for you.
Can I Deny this Protection?
Yes. If your bank gives you this protection and you do not feel comfortable then you need to call them up and tell them you do not want it. You need to be comfortable with all aspects of your banking. Then what you need to do is learn more about this protection, and if you really want it then go back and get it.
Additional Resources:
Share & Save This Post!
|
