One Month Before Overdraft Choice Must Be Made
Actually, it’s just a bit longer than a month. By August 15th, consumers are supposed to make a decision with their bank accounts as to whether they want overdraft protection or not. It’s something I originally wrote about in February, but since we’re close to the date I felt it was a good time to look at it again.
In that previous post, I laid out the two main scenarios for help in making a decision on whether to opt in or not. At that time, I wasn’t sure if it was inclusive of credit cards as well or just banks. Based on knowing that, at least for now, that it seems to only concern banks (unless I’ve just missed the inserts in my credit card bill), I’m thinking I’d like to clarify my stance just a little bit.
If this included all credit cards, I’d probably say that it’s not worth the cost to have it added to your credit card account. In my opinion, it’s better to not be able to buy something using your credit card than going over the limit. However, the rules have changed on that front, such that credit cards can’t hit you with extra fees for going over your balance in that particular pay period. They can stop you from going too far over the limit, but if you’re over by less than $50, you’re okay.
When it comes to your bank account, that’s another matter entirely. All of us have had a time in our lives when we’ve written checks without knowing that older checks have never cleared. Some people you pay won’t cash your check for six months. Sure, we should all be balancing our checkbooks monthly, but we don’t. So, it might not be such a bad idea to have that extra layer of protection.
It depends on how much your bank is going to hit you for each transaction, though. For instance, my bank is going to charge $22 per overdraft, while my wife’s bank will be charging $25 per. The upper limit per day for everyone is $100, which is a good thing, but in essence, if I have 4 checks hit that puts me over I only pay $88, whereas my wife will be at the max. That’s not much difference, and it’s making me think about leaning towards the protection. My wife decided she was going that route, and it’s already been set.
Everyone needs to know their buying habits, but knowing that it’s not always in your control could lead you to decide for the bank protection, instead of bouncing checks all over the place. I think it’s a wiser move than I believed it was in February.