| Read any major newspaper front to back or consult | | | | protection. Trouble is, at the end of the week, month or |
| any major news website or blog and you won't be | | | | year (depending upon the customer's buying habits), |
| able to escape hearing about the gripes people have | | | | most people realize they have paid hundreds of dollars |
| about overdraft protection programs | | | | in overdraft fees. At $25-$35 a pop, these fees really |
| In theory, overdraft protection is a great idea. In theory, | | | | ad up. |
| so is communism. Trouble is, neither one works in real | | | | 2. It is tough to fight your bank about the charges (and |
| life the way it sounds on paper. (Sorry, Karl Marx). | | | | win): |
| When the average person signs up for a new | | | | Fighting one's bank over seemingly unjust overdraft |
| checking account, they are automatically enrolled in an | | | | charges is something that many have attempted but |
| overdraft protection program. Most people are not | | | | few have succeeded at. Remember, this is big |
| even aware that they are being enrolled in such a | | | | business for banks (to the tune of about $25 billion per |
| program because the marketing model is set up as an | | | | year in the U.S. alone). Not something that banks want |
| "opt out" option. Opt out means that you have to tell | | | | to give up on easily. |
| the bank employee that you do NOT want to enroll in | | | | 3. All the big banks are doing it: |
| the program. Put another way: if you do or say nothing, | | | | If you are shopping for a new checking account that |
| you will be enrolled automatically. | | | | does not come with an overdraft program among any |
| Anyway, on the face of things, being protected sounds | | | | of the national banks, you are going to have a tough |
| like a good thing, right? After all, if your bank can't | | | | time being successful. All of the big banks and a large |
| protect your finances, who can? | | | | portion of the midsize and smaller ones present their |
| Well, it's true: overdraft protection programs do protect | | | | overdraft protection as a more or less mandatory |
| you from having your debit card charges rejected at | | | | offering, with few exceptions. Only recently are some |
| the point of purchase when your balance is too low. | | | | now offering opt-out (and in some cases, opt-in) |
| However, the bank then turns around and immediately | | | | choices. |
| charges you a fee for that protection. The cynical | | | | Fortunately, there are banks that offer overdraft |
| among us would say that it's a bit like paying the mob | | | | protection that does not require that you pay them |
| for protection if you have a small business in a shady | | | | any overdraft fees - even if you overdraw the |
| part of town: in both cases, you feel obligated to pay, | | | | account. Important: you will have to look beyond the big |
| but the price is high and it doesn't feel like you should | | | | banks to find these. Some of these banks require you |
| have to do so in the first place. | | | | to pay a low, monthly fee for their "no fee" overdraft |
| Here are the problems with overdraft protection and | | | | protection service. But, when you factor in the savings |
| what to do about it: | | | | in not having to pay heavy overdraft fees month in an |
| 1. Truly free overdraft protection is a myth: | | | | month out, this is a much cheaper option for the vast |
| There are countless banks that offer free overdraft | | | | majority of bank customers. |