We all make mistakes, so it is important to have protection. When it comes to your bank account, you can easily protect yourself from your mistakes through overdraft protection.
Whether it is that quick stop for cash you forgot to write in your checkbook, or the “one” you forgot to carry over on your mortgage check deposit, mistakes happen. Often you don’t discover them until you are in deep water at your bank.
Granted your bank isn’t too concerned, they actually profit from your mistakes. Bounced check and overdraft fees can be HUGE and they charge them for each transaction. If you overdraw your account with a few small charges, often the fees can be $30 to $40 per item, thus the fees are even more than the actual withdrawal.
Don’t throw your money away. Don’t let the banks win. Protect yourself now with some sort of overdraft protection for your checking account.
There are a couple different options to explore in regards to overdraft protection. A few of the most common are below.
1. Attach your checking account to a savings account. In this scenario, if you overdraft your checking the money automatically will transfer over from your savings account. At many banks, there is no fee for the transfer. If you have a savings and a checking account at the same bank, this is usually the least expensive option for overdraft protection.
2. Have a credit line or credit card as overdraft protection. In this case if you overdraft your account, the amount goes directly to a credit account. There are rarely fees for this, but the credit line often incurs an interest charge. Therefore, it is good to know your grace period and keep close tabs on it.
3. Don’t allow overdrafts. Not all banks allow this, but some do. You can turn off the bank’s ability to allow you to overdraft your account. The advantage is saving you bank fees, the disadvantage is that your payments will bounce to the merchants.
The solution you choice will depend on whatever you feel is the easiest for you to manage.
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*Balance Your Checkbook and Save Money