Overdraft Fees at Banks

You need to make a decision about whether or not you are willing to pay overdraft fees–charges made by banks when you attempt to take more money out of a checking account that you actually have available. Checking account overdrafts can occur whether you use a check or debit card.

Beginning July 1, new customers at banks must agree whether or not to opt in to overdraft protection. People with existing bank accounts have until Aug. 15, to decide. Do not ignore mailings from banks because one of them may have the notice informing you about how to opt out of overdraft protection.

If you opt out of overdraft protection, you can do away with expensive fees that can add up quickly. Many banking customers have stories about being charged a $35 overdraft fee after spending a few bucks on a coffee or other small purchase. Often the overdraft fees were charged without their knowledge or consent.

Instead of opting in to overdraft protection, you may be better off linking a savings account to your checking. Funds in your savings account are used anytime you attempt to withdraw more than is available in a checking account.  Generally, the fee for using a savings account if you overdraw is less than the charge for an overdraft fee.

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