banking

7 questions to ask before you switch banks

What are the overdraft protection options?
What are the overdraft protection options?

While you may hope you never have to rely on overdraft protection, you should make sure you understand your options and the cost of those options before you switch banks.

Weinstock says many consumers don't understand that not signing up for overdraft protection could be a good thing. Your debit card will be declined or your check will bounce without it, but there's no fee if you opt out of overdraft protection.

"If you opt in for protection, the cheapest way to do it is usually to have funds transferred from a savings account, a line of credit or a credit card. The median transfer fee is $12, and the median overdraft fee is $35 per transaction," Weinstock says.

Consumers should compare the transfer fee, overdraft penalty fee, maximum number of times an overdraft penalty fee is applied per day, minimum amount required to trigger an overdraft fee and extended overdraft penalty fee charged for each day the account is overdrawn.

"Overdraft protection is a double-edged sword," Freedman says. "It can be terrific and enable you to lower your risk of a bounced check, but you could end up paying a high transaction fee and a hefty interest rate if you sign up for a line of credit."

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