| Having a checking account is a necessary requirement | | | | one hand, because it means that the vendors to |
| for anyone who wants to live a normal life in this | | | | whom the customer promised the payments will get |
| shopping-oriented society of ours. Who doesn't think | | | | paid on time. |
| that life would be a bit easier with a checking account? | | | | 5. However, given that the bank honored the two |
| After all, with an account, you have the ability to write | | | | charges that caused the account to have a negative |
| checks and to use a debit and credit card linked to | | | | balance, the bank also charges the customer an |
| your account. You can also gain access to a | | | | overdraft fee. This fee can range, but is usually in the |
| nationwide network of ATM machines, giving you | | | | $25 to $35 range per charge. If the fee is $35, in the |
| access to your cash no matter where you go. | | | | example above, the customer would have to pay ($35 |
| One reason that some people put off opening a | | | | x 2 =) $70 in overdraft fees! |
| checking account is that they are concerned about | | | | As we can see, checking accounts with bounce |
| having a check or debit card transaction bounce. And, | | | | protection have their pluses and minuses. Is bounce |
| this concern is justified. After all, overdraft fees are a | | | | protection a good thing? Yes, they are good in that |
| big business for banks. In 2006, banks earned over | | | | they cover outstanding charges. But, the fact that they |
| $25 billion in overdraft fees in the U.S. alone. | | | | charge such high fees makes them very expensive. |
| People looking to open a new bank account often look | | | | The very best checking accounts are those that offer |
| for checking accounts with bounce protection. These | | | | bounce protection but do not charge a fee. Yes, |
| accounts have overdraft protection programs in place. | | | | surprisingly, there are banks that offer bounce |
| Here is how overdraft protection programs work: | | | | (overdraft) protection without charging a fee. These |
| 1. The customer has a certain amount in the checking | | | | banks charge a low monthly fee which is far less than |
| account, say $100. | | | | what the average person pays in overdraft fees per |
| 2. The customer does his or her best to not make any | | | | month. |
| charges against the account that are larger than this | | | | A final note: have you been rejected recently for a |
| current balance amount. | | | | new checking account? Your name may have been |
| 3. One day, however, the customer misjudges the | | | | reported by a bank to something called Chex |
| current balance and makes three charges against the | | | | Systems, a service that banks use to evaluate credit |
| account: one for $45, one for $60, and one for $5. | | | | risk levels for prospective checking account holders. |
| 4. The first charge of $45 is fine, but the $60 charge | | | | Fortunately, some banks now offer second chance |
| puts the account into a negative balance, and the $5 | | | | checking accounts. These banks promise to never |
| charge also hits the account when it is "in the red." The | | | | refer to Chex Systems when making decisions on a |
| result: the bank covers all three of the charges, due to | | | | new account holder, increasing the likelihood of |
| the fact that the overdraft protection program is in | | | | acceptance. |
| place for this customer. This is an advantage on the | | | | |