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Oops, you're overdrawn, now what?

It is always nice to have a safety net in life and when it comes to your money, right?
But what if your safety net becomes expensive?

Overdraft protection can come in many forms. And, although banks will not charge you the full $25 to $35 fee per check (along with the other party on the receiving end of the rubber check), they will charge $5-10 per transaction. And, they may charge interest and call it a loan or a maintenance fee depending on your agreement with them. There are some banks that will only transfer money in $100 denominations, and what if you do not have the funds in your savings account.

With the advent of online banking, you should be able to better keep track of your balances than even a few years ago, even if you're not a slave to balancing your checkbook. So, in this case, this makes overdraft protection less warranted. You can often make your own "overdraft insurance" by having the bank link your accounts together so you can make a transfer yourself before the balance becomes too low. Or, you can set up alerts (email or text message) to let you know when your balance falls below a certain level. This is a super tool, and usually free for the asking.

In the case there is little or no fees for the automatic transfer from your loan, savings, or credit card then this is a great tool. There would be no reason not to have it.

It is best to discuss with your personal banker your current situation, income and needs. Look at your habits:

*Have you ever overdrawn your account?
*Do you already have a loan with the bank you could link to your checking account?
*Do you keep a little cushion in your account in case of mathematical or other errors?
*Do you use a debit card on a regular basis that could overdraw your account?
*Is your savings tied to your checking as a bank feature?
*Do you have to keep a minimum amount in your account to earn interest?
*Do you balance your account on a regular basis?
*Do you access your account and balance online or through an ATM regularly?

These are all good points to consider and will better inform you of your financial habits.
It is nice to know your bank will have your back in the case of an addition error or unexpected automatic withdrawal sending your world crashing down around you.

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