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Overdraft protection

Date: Tue, 03/09/2010 - 02:28

Submitted by anonymous
on Tue, 03/09/2010 - 02:28

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Total Replies: 5


I am trying to open an account with a bank. They are offering me an overdraft protection plan against some fees. I would admit that I was quite convinced by the way the bank representative had explained me about the benefits of carrying overdraft protection. However, since I hardly have any money left at the end of the month to waste, I just want to hear from you as well that carrying overdraft protection does worth. I don't want to spend money on something that I would not need.


Don't do it!! Overdraft protection allows you to keep using your debit card when you're overdrawn, but it's expensive. Should your account be overdrawn for some reason (math error, missed deposit, electronic transfer gone wrong, bank holding your deposit funds), every single purchase you make on your debit card - newspaper, lunch, coffee will incur a charge. And the banks typically pay the highest check/electronic payment first, allowing excess charges to be incurred on small charges.

Try to keep a cushion in your account to avoid using overdraft protection. I had a mess to straighten out for my daughter with her bank over this "privilege".


lrhall41

Submitted by aubrey on Wed, 03/10/2010 - 07:40

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i agree dont do it. the only thing that i recommend is that like my husband an i have what our bank calls a quick cash loan. which is a revolving loan for 2,500.00. if i overdraft the amount comes out of that loan an i will get a bill for it later just like using a credit card. biut if i dont use it i dont get billed. dont pay for that overdraft protection. either do something like we did, or hide like 100.00 from yourself every month while balancing your checkbook.


lrhall41

Submitted by love_my_things on Wed, 03/10/2010 - 08:06

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If I understand your question, the bank wants to charge you a fee to have overdraft protection on your account. If you wind up using it, you'll be paying the bank interest and other fees, so if they're charging you a fee to have the overdraft in the first place, don't do it.

If the fees only occur when you use it, you need to look at how you spend your money and whether or not you ever pay NSF fees or have checks bounce. If you're paying fees because there isn't enough money in your account sometimes to cover things you're paying, it might be cheaper to pay the overdraft fees for those times.

BUT, overdraft is a slippery slope. If you barely have any money left at the end of the month as it is, how are you going to pay off any overdraft debt if it happens? The last thing you want is to have an ongoing overdraft where you're getting fees every time you do anything with your account.

I know it's easier said than done, but if there's any way to save some money that you can use as a buffer - essentially you fund your own overdraft protection - that's a much better way to do it. Either put that money in another account and just transfer some over when you need it, replacing it again ASAP, or put it in the main account and just "pretend" it isn't there.

eg. If you have a $500 buffer and your bank balance is $625, you look at it as $125 in the account.

Mike


lrhall41

Submitted by mramsey95 on Wed, 03/10/2010 - 10:17

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agree with the above posts i have had it with overdraft and without overdraft protection on my bank account and you watch yourself and your money more closely when you do not have the protection on there. try to budget to get a cushion, my grandma always wrote checks a little over so she always had a surplus just in case.


lrhall41

Submitted by on Wed, 03/10/2010 - 19:27

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My son had this on his account several years ago and kept withdrawing money from his account because it would let him. He thought that if he didn't have the money, they wouldn't let him have it.! Needless to say, he didn't keep an eye on what his real balance was and it took a while to get it all straightened out.

Our bank offer this service for free. But since I came to this site, I started to try to get out of debt. In doing this, I made a strict budget and know what my balance is pretty much all the time. We also have a 24 hour phone number,automated, to get our balance, deposits and checks that are in. This helps me keep on top of my budget and money. When it gets close to pay day, I really try to keep on top of it.

If the temptation is too high for you, don't do it. It won't be worth the fees and costs this involves. Best of luck..karen


lrhall41

Submitted by Bossy4455 on Sat, 03/13/2010 - 09:09

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