Overdraft protection comes with a price. It’s a lot cheaper than paying the penalties for the check being returned which can be quite expensive when all said and done. But we all agree that in order to prevent most charges is to just avoid having to use the overdraft protection, or keep an accurate record of money in, money out.
Since some checks take a lot longer to clear, it gives one the feeling that their account has enough money to cover a bill, and when all the checks clear, the check that was just written is now going to cost us as a result of insufficient funds.
Be even more aware that just because you may get a call from you’re bank offering overdraft protection promotional deals, and hear you can write as many checks as you want up to the amount you are protected for, you just might find that you’ve been given the wrong information after using the overdraft protection in that the caller from the bank may have sweetened the deal by giving you the impression that there would be no charges for the next six months after you agree for the protection.
Well, as in any business, there are those who last a few months on the job, and it’s usually because they just want to make the commissions by telling you anything that will get you to commit to their offer.
So what will happen is after a while you will receive calls and correspondence from the bank saying you are delinquent on you’re payments, and there is a sizable interest rate attached to the outstanding amount you used in overdraft. Pretty neat surprise indeed I say.
So we must do a little information gathering about what overdraft protection will cost us in any given transaction or time frame. It’s a good deal if you do not have the money in the bank at the time you need to write an important check, but like a credit card, there are charges for it’s use and the only way to avoid charges is to simply ignore the urge to use the protection for anything other than an emergency situation.
Learn the basic essentials for good book keeping of you’re finances and banking. The math is simple and it’s just a matter of logging all the checks you write against the amount you put in to cover the checks. It’s always a good practice to keep an open balance of at least a hundred or two so as to cover something that may come up that you didn’t prepare for.