Comments on: Ask the Piggy Bank: Is Overdraft Protection Worth It?

By: Banks Encourage Checking Account Overdrafts : Bizzia

Banks Encourage Checking Account Overdrafts : Bizzia — Sat, 28 Mar 2009 13:05:24 +0000

[...] overdrafts are common for you, it might be worth it to pay for overdraft protection, though. On accounts that aren’t protected, banks charge between $38 and $45 per transaction [...]

By: miranda

miranda — Wed, 15 Oct 2008 00:31:26 +0000

Thanks for sharing. That’s a lot of fees! My husband and I had that issue as well, for a while. I told him that if he wanted to use the debit card, he needed to check the account and then record what he spent, or at least bring me the receipts every day so that I could make a record.

By: Emily

Emily — Tue, 14 Oct 2008 16:07:20 +0000

My bank makes me have overdraft protection. My husband and I used the same account and he would use the debit card without checking the amount of money in the account. As a result we would end up with over $1000 per year in overdraft charges. I ended up taking his card away from him and canceling any automatic payments and now we have no overdrafts.

By: Shai Coggins

Shai Coggins — Fri, 12 Sep 2008 12:25:14 +0000

Well thought out post, Miranda. Thanks.

By: miranda

miranda — Sat, 06 Sep 2008 20:12:40 +0000

Thanks for sharing! It really does depend on what works best for you.

By: Alicia, Mental Health Notes

Alicia, Mental Health Notes — Sat, 06 Sep 2008 19:33:30 +0000

I don’t think overdraft protection would really be worth it for me (I’ve only overdrawn a couple of times in the past four or five years, and neither time was an amount so high that I didn’t have it paid right back relatively quickly), but I can see how it would benefit others (namely, people who deal with much larger amounts of money in their checking accounts than I do, haha).

By: miranda

miranda — Thu, 04 Sep 2008 19:02:17 +0000

Thanks, Peter, for sharing! One of the maddening things about banking is that otherwise savvy and responsible people occasionally make mistakes. Things are forgotten. We transfer things from the wrong account. And when it does happen, it can cost hundreds and hundreds of dollars in fees.

By: Peter

Peter — Thu, 04 Sep 2008 18:28:17 +0000

This was something I wish I had recently. I made a silly mistake when I transferred $1500 out of my main checking, leaving myself about $100 in my checking account after all the bills were paid (i thought). I only realized later that I had forgotten about the $145 homeowner’s association bill coming out of that same account.

Even though I actually had several thousand dollars in my saving account, they charged me almost $200 in overdraft fees before I realized something was wrong. They reversed 1/2 the charges, and I paid them – but I wished I had gotten the overdraft protection.. I could’ve saved $75.

The reason I hadn’t signed up originally was because my previous bank gave overdraft protection for free – while this new one charged $25/year. Time to switch back to the other bank?

By: miranda

miranda — Wed, 03 Sep 2008 14:42:15 +0000

Thanks for sharing, James! I like this idea of connecting your checking account to your savings account. I checked with my bank, and no dice. Maybe I need to shop around for a better bank.

By: James@capitalcouplesfinance.com

James@capitalcouplesfinance.com — Wed, 03 Sep 2008 13:00:15 +0000

Overdraft protection can be worth it…but not if it’s tied to a line of credit. I don’t know if all banks are like this, but mine allows you to tie it to another account that you hold there, such as your savings account. Then you only get hit with the transaction fee. No annual. No interest.

My bank doesn’t promote this but I know it’s offered because I used to work there. You may just have to ask your bank about it specifically.

One more point…at my bank, they only do transfers from the line of credit in $50 increments. Overdraw your account a dime…it costs you $50 plus the transaction fee.