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Bankrate: Overdraft Protection Plans

Standup Intro: The majority of banks now offer some form of free protection against bouncing checks. Sounds great, but is it? Bankrate.com dives into the details.

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Voice over 1: Do you sometimes spend a little more than you might have in the old bank account?

SOT: “I think everybody probably overdraws their account at some point.”

Voice over 2: Bounced checks: common, expensive and embarrassing.

Voice over 3: And may be a thing of the past these days, many banks and credit unions are offering a free, automatic solution to the problem. It’s often called something like courtesy overdraft protection, and unless you opt out you get it. And it’s free…until you use it, anyway.

Voice over 4: (cover) Say you wanted to buy a $5 12-pack of soda with your debit card. But you’ve only got $4 in your account. Well, before they had things like courtesy overdraft protection you’d have run your debit card, it would’ve been rejected and you’d have left the store empty handed.

Voice over 5: But with courtesy overdraft, instead of your card being rejected, it’ll go through as if the money was there. You get your soda…but you also get something a little harder to swallow: a fee as high as $35.

Voice over 6: Paying $35 to borrow a buck doesn’t sound like a good deal to some consumer advocates, like the Consumer Federation of America and The Center For Responsible Lending. In fact, they make the comparison between this type of lending and other, less reputable kinds.

Voice over 7: Especially since, according to their reports, up to 80% of banks automatically sign new customers up for this service…and they don’t know it, since it’s buried in the fine print of new account documentation.

Close: Whether courtesy overdraft protection is really a courtesy depends on your point of view. But find out if you have it, and what the terms are. It’s as simple as...checking! For Bankrate.com, I’m Kristin Arnold.

Bankrate.com's corrections policy
-- Posted: December 31, 2008
 
 
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