There are times when poor organization concerning people’s checking accounts, leads to a bounced check or charge. This is usually when the first thoughts surface about the overdraft fees of their bank. With the busy lives people live, having a charge not covered with the available funds in the bank, sets them back and interrupts other aspects of their lives. For some people, this isn’t a problem because they always have a certain amount in their checking account. For others, having protections in place through their bank may appeal to them. In this article, we’ll ask whether opting for courtesy overdraft protection is worth it or not.
Generally, banks and credit unions have around the same policies when it comes to overdrafts and their fees. With some variations excluded, generally they’ll charge a $30-$40 overdraft fee, and then your account will be in the negative. Without overdraft protection or courtesy pay opted into, the merchant who received the bogus payment won’t get their money. The merchant’s fees will also be added to the total costs of the mishap. Some banks even charge a daily fee for your account being in the red, at the rate of around $5/day. None of this is good.
With most banks, customers will automatically have some overdraft protection with certain transactions like checks and direct deposits. The money will be transferred from the customers savings account, their line of credit, or some other option that was previously set up by them. In this case, the amount of the transaction not covered will simply be covered by a transfer with a small fee added. So, if you have a line of credit or money in a savings account, then courtesy overdraft protection that may cost a monthly fee, isn’t worth it.
Many times the courtesy overdraft protection doesn’t costs a monthly fee, but sometimes it’s only eligible to certain customers. The limit of money they set usually maxes at $500. If customers opt into this, it will cover ATM transactions, debit card purchases, direct deposits, and checks, up to the limit set. The benefit of not having merchant fees, and staying in good standing with merchants are important benefits to consider. To avoid the embarrassment of a purchase not going through, is a benefit as well. Depending on where the purchases are being done, this could mean avoiding harm to one’s reputation.
Whether someone has courtesy overdraft protection or not, they’ll be charged a fee from the bank if an overdraft occurs. The difference is, they’ll have to pay the merchants fees and their reputation can be harmed if they don’t have it. If they have transfer options set-up and money in those alternate accounts, they’ll avoid this problem. If they don’t have transfer options set-up, then opting in to courtesy overdraft protection is a good option, especially if they don’t charge any monthly fees. Hopefully, this article has helped to give insight into whether courtesy overdraft protection is worth it or not.