Essentially, an overdraft takes place when customers make more expense by spending more than they have in their accounts. In this case, the bank covers shortfall and deducts a penalty, normally around $35 by big banks. However, a lot of consumers sign up for overdraft protection services that grants them funds which are shifted to a dedicated account or a credit card to cover a shortfall. This service usually charges a nominal transfer fee.
So, you may ask, how does one protect their checking account?
• Don’t give your bank information to anyone you don’t trust – share your bank details with those who you completely trust and can rely upon such as your family members. Don’t disclose your credit card number to anyone who claims to be calling from the bank. See to these matters personally by visiting the bank.
• Access your monthly statement – cross check your banking transactions to make sure nothing is out of the ordinary. If you come across a transaction that is not authorized, contact your bank as soon as possible.
• Make your bank aware about any problems immediately – the sooner the better. Prolonging a problem can turn out to be hectic and compromising in the long run. Make your errands correct as soon as possible as to avoid any hassles down the road.
• Make sure you have adequate amount of money in your account before you make any check or credit – with advancements in technology and rapid process, checks are being processed much quickly these days. This essentially means that the amount will be deducted from your account much sooner than you thought. If you don’t have money in your account, it could be bad in terms of reputation and you might be charged a fee.
• Understand that you have rights under consumer protection laws – each individual has rights under the constitutional law. You must know these rights so that you are not exploited.