| A bank is a business and these institutions do need to | | | | are not given a chance to mull things over and you |
| make a profit if they are to survive and compete | | | | tend to make use of that service because it's there |
| effectively in the financial industry. However, it would | | | | and it sounds like a good offer. The overdraft limit can |
| seem that these days banks will do anything to | | | | go as high as $1,000 and what's more, some banks |
| squeeze out as much income as they can from their | | | | automatically credit this amount to your account |
| customers, even if the practices are quite unfair. One | | | | thereby tempting you to spend money that you don't |
| of the most underhanded practices employed by | | | | have. With this plan, the bank has the option to reject a |
| banks is the provision of bounced-check protection, | | | | draft so protection isn't really guaranteed. |
| also referred to as a courtesy overdraft. | | | | What You Can Do |
| How It Works | | | | Logic dictates that to prevent yourself from being |
| A courtesy overdraft is provided by a bank when a | | | | caught in a situation where you will need an overdraft, |
| customer doesn't have enough money in his account | | | | you need to manage your finances wisely. But even |
| to cover his expenses. Let us say, for instance that | | | | the most frugal spender will, from time to time find |
| you have $200 remaining in your account and you | | | | himself in a bind. As an alternative, try to closely |
| wrote a check for $300. The additional $100 that you | | | | monitor your account and regularly check how much |
| need will be provided by the bank so your check | | | | money you have left so you don't inadvertently spend |
| doesn't bounce. You are extended financial help, you | | | | more than what your account can cover. |
| avoid paying a merchant's returned check fee which | | | | Call your bank to tell them you want the |
| ranges from $25 to $27 and you avoid the | | | | bounced-check protection plan eliminated from your |
| discomfiture brought on by a bounced check. Sounds | | | | account. Remember, this plan is automatic and unless |
| good, right? | | | | you make that call, the bank will assume you want it |
| Wrong. Banks charge customers between $20 to $40 | | | | and won't remove your account from the plan. |
| per transaction, so each time you carry out an | | | | Courtesy Overdraft versus Traditional Overdraft |
| overdraft you are charged a fee. If you don't closely | | | | If you absolutely must have overdraft protection, enroll |
| monitor your banking behavior, these fees can easily | | | | in a traditional overdraft plan. While this plan will still |
| accumulate. Aside from transaction fees, some banks | | | | present you with fees, it won't be as exorbitant as the |
| charge penalty fees for a negative balance - | | | | ones you'll encounter in a courtesy overdraft. |
| somewhere between $5 to $10 per day. So until such | | | | Additionally, a traditional overdraft involves a contract |
| a time that you pay off the loan, every single day, the | | | | so the bank is mandated to cover your draft. If they |
| bank is charging you. | | | | fail to do so without justifiable reason, they may be |
| Banks enroll customers automatically in this plan. You | | | | held liable. |