Sunday, August 22, 2010

Overdraft fees

The minimalist has been quiet for a while, and I apologize. I promised a post on taking cheap vacations, and since I'm still recovering from the one we took, it's taking a lot to sacrifice a nap and post this.

Recently the banks rules changed and they have to ask your permission now if you want overdraft protection (imagine that, the nerve). Every bank is handling it in a slightly different way, like dropping overdraft fees or sending letters explicitly asking its customers to opt in.

What this means for you you is that if you have overdraft protection, make sure you're not paying for it! Remember, fees to the bank, for what ever reason, are bad (they already have your money).

If you don't know already, overdraft protection is what happens when you accidentally drain your checking account below $0.00. Two things can happen. The bank can loan you the difference, or the difference can be pulled from a different account (savings, say).

If it's the second case, make sure they're not charging you. Loans always cost money, so in the former, you might have to eat the fee. In the best of all possible worlds, you never strain your checking account to the breaking point, and you'll never have to worry about a fee.

Still though, if you opt in (no reason not to, I opted in), make sure that you won't get an overdraft fee if the account is linked to your savings. If it is, complain, and find a new bank.

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