Using
credit card for overdraft protection | | |
| In addition, she says, payment is guaranteed.
With a courtesy overdraft (the default for customers without a savings account
or credit card linked to checking), the bank may decline the check.
But consumers who like the idea might have to shop
around to find an institution that offers it.
"I don't think it's an
emerging trend," says Arnold, who tracks various card services through his
site. Wells Fargo Bank also offers the overdraft protection
option with its credit cards. Customers are charged a flat fee that varies with
the amount of each overdraft check or debit, says a bank representative. For up
to $25, it's $10. For $25 to $100, the cost is $12.50. For $100 to $500, it's
$15. For anything more than $500, the cost is $20. There is also a finance fee
that varies, depending on the individual card agreement.
But the service is not automatic. Customers have to
notify their institutions and enroll in the program. Often enrollment
is free and the only requirement is that the checking account and
the credit card are both from the same institution.
Consumers
should ask some questions to make sure they're getting a good deal.
 |
Must-ask questions: | |
| |
|
What's
the institution's overdraft fee? Since this is the amount you want to save,
it makes a nice yardstick for comparing the fees you'll pay if you set up an overdraft
protection program. Is
there a transfer fee if you use a credit card to backstop your checking account?
Many times there is. Sometimes it's a flat fee. Or it can vary with the amount
of the overdraft. What
other fees could be incurred if money is pulled from your credit card? Some
institutions will charge multiple fees for the service. Find out in advance about
all potential fees and the amounts. | 
