checking

How do I: Get overdraft protection?

Topic: Checking & Savings
Who is affected: Consumers at any Life Stage
DEGREE OF DIFFICULTY: Easy
What you'll need: Separate account to provide the overdraft protection

What you need to know

Nobody likes to bounce a check. There are penalty fees to contend with, not to mention the embarrassment. For these reasons, some people opt for overdraft protection on their checking accounts.

Overdraft protection connects your checking account to another account you hold with the bank, such as a savings account, credit card or line of credit. If you bounce a check, the bank will cash it, drawing money from the account of your choice.

To sign up for overdraft protection, you must already have or open an additional account with your bank, be it savings, credit card or line of credit. You'll also have to be deemed creditworthy by your bank.

Step-by-step
Don't let banking fees get the best of you. Calculate how much you pay annually and learn how to avoid getting stung in the future.
Use the tool to print out four quarterly worksheets, plus a yearly total worksheet. Record your fees month by month, then by quarter. Add them up at the end of the year to discover how much you’ve been paying out.

Beginning in 2010, banks have stopped providing automatic ATM and debit card overdraft protection. Instead, customers have to sign up for such coverage.

Customers who decide not to "opt in" to such a service will have debit card purchases or ATM withdrawals declined if they exceed the dollar amount available in their existing balances.

Overdrafts triggered by checks and ACH transfers still are covered automatically.

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