| Let me take you on a short (I promise!) guided tour of | | | | You see, overdraft protection delivers exactly on what |
| the history of the banking industry. I promise that this | | | | its name promises: it does indeed protect people from |
| short tour will be worth your time, since at the end of | | | | having their debit card transactions, checks, and credit |
| the it you could save hundreds of dollars a year in | | | | card transactions from being rejected due to |
| overdraft fees. | | | | insufficient funds. However, it does NOT protect |
| Banking in Old Europe | | | | people from paying super-high bank fees. In fact, it |
| The lending and borrowing of money has been in | | | | excels at doing this! |
| practice for at least a few millennia - probably ever | | | | For, as you know, every time your bank covers your |
| since money was invented. However, banking really | | | | overdraft for you they charge you a hefty fee for |
| started taking its present form in the old coffeehouses | | | | doing so. In fact, this large fee repays the bank for the |
| of London, England a few hundred years ago. People | | | | potential "loss" of the micro-loan they extended to you |
| would meet there to lend each other money. | | | | (to cover the negative balance) hundreds of times |
| Soon, official banks were formed. The basic principle | | | | over in most cases. It is for this reason that many |
| was simple: an average citizen would deposit his | | | | people believe that overdraft protection programs do |
| money into the bank and the bank would keep it safe | | | | not really benefit the customer at all. |
| for that person - and even pay them a bit of interest t | | | | The Big Switch to No-Overdraft Fees Banks |
| boot. Not a bad deal, and better than keeping one's | | | | Back to our mini history of banking: nowadays, there is |
| money under the straw mattress at home. | | | | a big shift away from overdraft protection. Even the |
| Modern Banking | | | | U.S. Congress is trying to step in on behalf of the |
| Fast forward to the 1970's in North America. | | | | average bank customer to try to get banks to relax |
| Competition in the personal banking space became | | | | their strict overdraft fee policies. But, bottom line is that |
| fiercer than ever. At that time, marketing and | | | | the only way to really avoid overdraft fees altogether |
| advertising started to play a more powerful role in how | | | | is to switch to a no-overdraft fee bank. |
| banks made decisions The marketing departments | | | | 3 Ways to Switch |
| started thinking of a ton of new banking products that | | | | 1. Ask a friend for their recommendation of a |
| they could use to lure customers away from other | | | | no-overdraft fee bank that they like and use. (This is |
| banks and through their own doors. | | | | easy to do but may be embarrassing for some |
| Over the next few decades, this type of thinking | | | | people). |
| spawned a whole slew of new banking products and | | | | 2. Check your Sunday paper for an ad for this type of |
| services, including for example: the ATM machine, the | | | | bank. (Newspaper ads can show a lot of detail about |
| debit card, free checking and overdraft protection | | | | the offering). |
| programs. | | | | 3. Do an online search for a no-overdraft bank. (This |
| The Coming of Overdraft Protection | | | | option is great because it is easy to find a lot of banks |
| Most of these inventions offer bank customers | | | | in one place and then compare them). |
| greater convenience and even a better quality of life | | | | No matter how you decide to switch, just do it soon. |
| than before they came along. The possible exception | | | | The faster you switch, the faster you will become a |
| among them is overdraft protection, which has proven | | | | part of the latest wave of banking history as you |
| to be more of a mixed bag for customers. | | | | become the customer of a no-overdraft fee bank. |