Well, that took long enough. For years, banks have made billions of dollars thanks to overdraft fees. It looks like those days are over (maybe). The Fed passed some new laws regarding checking accounts last year. One of them requires that banks actually ask customers whether or not they want overdraft protection. What’s this? Giving consumers more choice? I’m interested…
If you opt in to overdraft protection, your purchases will still be processed at the point of sale. But, and this is a big but, if your account balance can’t cover the entire purchase amount you will be charged an overdraft fee. My local bank’s fee is something ridiculous like $35. Your bank is probably similar.
If you opt out of overdraft protection, any purchases that exceed your account balance will be declined. Yes, this could be potentially embarrassing. But is saving face worth $35? That, I suppose, is a decision that everyone must make for themselves.
For new checking accounts, July 1st is the date on which banks can no longer automatically opt you in to overdraft “protection”.
For those of us with existing accounts, banks have until August 15th to ask us whether or not we want “protected”.
My own bank emailed me a few days ago telling me I needed to make a decision:
My excellent Photoshop skillz displayed…
As you can see from the screenshot, I chose to opt out of overdraft protection. I don’t use this account for day to day purchases anyway. I also always know how much is in my checking account so overdrafts simply aren’t an option.
{ 2 comments… read them below or add one }
The ING overdraft isn’t too bad. It’s basically a line of credit with no overdraft fees that kicks in only when you overdraw your account. You only pay interest for the duration of time that it is needed and based on the amount that you used.
Yeah, I really like ING Direct’s way of doing things. It just makes sense – there’s no way $35 for overdrafting can be considered a reasonable charge.