| An overdraft is what occurs when the total amount of | | | | protection programs as being very hard on their |
| the charges you make against your account exceeds | | | | pocketbooks and have wanted to opt out of them |
| the current account balance, causing the account to go | | | | completely. These people would rather have a pending |
| into a negative balance (a.k.a., to go "into the red."). | | | | debit or credit transaction denied at the point of |
| In the case of most banks today, customers are | | | | purchase if their current balance will not support it than |
| enrolled in courtesy overdraft protection programs that | | | | have to pay exorbitant fees to their bank. |
| "protect" them from any pending debit, credit or check | | | | Unfortunately, many banks make the option for |
| payment from being denied due to their having | | | | courtesy overdraft protection opt out fairly difficult to |
| insufficient funds in the account. | | | | attain. They require a customer to meet certain |
| The shadow side of these overdraft protection | | | | conditions if they are to get themselves out of the |
| programs, of course, is the huge fees associated with | | | | program. |
| these courtesy services. Even a $5 overdraft can | | | | If you want to opt out of your bank's program but |
| result in the account holder paying an overdraft fee of | | | | don't know how, here are some guidelines: |
| $25 or more for EACH transaction that is made after | | | | 1. Locate and read your account terms and conditions. |
| the account is overdrawn. These can get expensive | | | | You should be able to find a copy online or with your |
| for consumers: just two overdrafts can cost a | | | | original application papers. Find out whether you meet |
| customer $50 to $70 in a single day! These fees can | | | | the conditions. |
| really add up over the course of a month. | | | | 2. If you cannot find the terms and conditions |
| Overdraft fees are big business for U.S. banks. | | | | paperwork, contact a representative and inquire about |
| Together, they raked in over $25 billion in overdraft | | | | their opt-out policy. This will differ greatly depending |
| fees last year alone. This is a lucrative business model | | | | upon the institution. |
| and they want to do everything they can to keep the | | | | Even if you are allowed to opt out of the program, you |
| gravy train moving. | | | | may be debating whether this is a good idea. After all, |
| Since courtesy overdraft protection programs were | | | | who wants to face the embarrassment of having a |
| introduced by banks around a decade ago, most | | | | pending charge denied while at the supermarket, |
| financial institutions have increased participation rates | | | | coffee shop or clothing store? Better to just keep |
| by their customers to nearly 100%. How have they | | | | paying the fees, right? Not necessarily. |
| done so? By making the programs opt-out. | | | | An alternative to opting out is to find a bank that will |
| An opt-out program means that an applicant is | | | | never charge you an overdraft fee - even if you |
| automatically enrolled without being given the | | | | overdraw your account. They do exist and they are |
| opportunity to opt in, or to actively choose their | | | | looking for new customers. In the case of these |
| participation. In the case of an opt-out program, a | | | | non-overdraft-fee banks, they will honor a pending |
| person must specifically indicate that they do NOT | | | | charge not covered by your current balance but will |
| want to participate in it. Without such an indication, the | | | | not charge you an overdraft fee for doing so - ever. |
| person is automatically enrolled - often without their | | | | This can be an ideal alternative to staying with your |
| knowledge or awareness. | | | | current bank if you are dissatisfied with their overdraft |
| Many customers have come to find overdraft | | | | policy. |