Bank Overdraft Options

Bank Overdraft Options

Bank Overdraft Options

If you do not own a card you do not know what an overdraft is. Fortunately, I believe that only a child who can not reach an ATM machine monitor has no idea what an "overdraft" is.

If you use a debit card, sometimes, the amount of the money you withdraw may be less than the amount available.

As a rule, banks which allow overdraft on their cards, charge interest of the cardholder for using the bank's money. In order to help clients control their expenses they install so called overdraft-protection. What is an average fee offered by the banks for this type of service?

Based on the information of the 2008 study by the Federal Deposit Insurance Corp., overdraft fees as a rule range from $10 to $38 for each transaction.

According to the Los Angeles Times, "Overdraft fees on debit cards and ATM transactions account for about half of all overdraft fees, which total nearly $24 billion a year."

For example, Chase bank constantly enhances overdraft control, by introducing a wider range of alerts, when the transactions or ATM withdrawals exceed specified limits. The protection in this case means that you have a back-up account that covers the overdraft amount. If you write a check and the amount is higher than available on your check account, then money from your Chase credit card or Chase savings account are transferred to the checking account. This is said to save your money, while no interest is applied to the overdraft amount, however, once a day (only allowed) $10 are charged for the transaction from the Overdraft protection account.

TCF Bank (http://tcf-bank.pissedconsumer.com/) also looks out for its clients and offers Overdraft Protection Line of Credit. However, there are reports from the account holders at this bank, that this protection is that good yet, while bank keeps on charging overdraft fee in the amount of $35 dollars even if you exceed your request for $1.

Not every card holder who withdraws money from an ATM or pays for the purchase is willing to overdraft his account. He would rather get some $50 less than expiated but does not give his money to the bank for almost nothing. That is why in order to protect consumers, starting July 1, 2010, the Federal Reserve introduces the new rules which limit the banks' freedom to automatically charge fees every time the debit card holder withdraws more money than he has. These new overdraft rules provide consumers with more flexibility on their debit cards, but do not spread onto checks as well as automatic bill payments which are set up for paying utility or mortgage bills.

Bank of America was one of the first banks to apply these rules and alert its account holders for the overdraft possibilities. The company charges no fee if the overdrawn sum does not exceed $10 per day, otherwise a card holder has to pay $35 for each overdrawn item. The bank charges not more than for 4 overdraft items per day.

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