Unanswered: Do I accept or decline the ATM / Debit Overdraft thingy?
So I just opened my checking account online today and I got this message:
Quote:
Previously X Bank, at our discretion, could authorize and pay ATM and Debit Card overdrafts on your behalf. However, based on new regulations, we must decline these transactions unless you give us permission to include them in the Standard Overdraft Practices on your account.
At X Bank, you have a choice for how we handle your ATM and Debit Card transactions.
* Select Yes, if you want X Bank, at their discretion, to authorize and pay overdrafts on your ATM and Debit Card transactions.
* Select No, if you do not want X Bank to authorize and pay overdrafts on your ATM and Debit Card transactions.
Keep in mind, that by selecting "Yes" you'll enjoy the following advantages:
* You may be provided with additional funds when an unexpected expense comes up and there are no funds available in your account.
* You may be able to access your funds in advance of a deposit becoming available later that business day.
* Overdraft fees only apply when the bank pays an overdraft on your behalf.
Remember, effective August 15th accounts that have chosen not to authorize Standard Overdraft Practices will have overdrafts declined on any ATM or Debit Card transactions. So please be sure to set your preferences today.
My situation is the following:
I have a checking account at this bank. It has most of my savings in it. I almost never use the debit card. We have an emergency fund. It is extremely unlikely that we would have an overdraft. Do I lose anything by opting in or out? I don't trust these guys too much.
Opinions?
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These kinds of overdraft lines don't save you any money. Lets say you actually were close to $0 in your account - if you wrote a check and it bounced, the bank would charge a fee. If you wrote a check and the O/D'd it, the bank would STILL charge a fee.
BUT if you were at an ATM or Debit machine, and you tried to execute a transaction and there was no $ in the account, the purchase / withdrawal would simply be declined - no fee. IF you allow o/d, they'll let you spend money you don't have, and charge you a fee for it.
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Excellent! Thank you! As soon as I saw the message, the first thought that popped into my head was "Ask FV!!" I will decline - my other debit card declines when I don't have money in the account (thank goodness because these are American accounts, and with the Euro / Dollar exchange rate constantly changing, it's barely physically possible to know how much money I have in my account at any given time!).
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Another way to look at it (just in case you were to second-guess yourself) is to ask yourself: "Do I want to be able to accidentally take out a loan without being aware of it?" Because that is what you would be doing if you invoked the overdraft provision. To anyone wanting to be frugal, I would hope that the answer would be "H*ll, no!" Nothing wrong with a loan per se, if you have planned it and made the decision with your eyes open, but you don't want to be stuck with one by accident.
I think we are all in agreement on declining. One of my coworker's kids got into trouble by using an ATM card with overdraft and essentiall borrowing over $400 that he did not have. The fees on top of that were large and it was a huge mess. Bob ended up having his son cancel the account, as no one had explained how this worked to them.
I think we are all in agreement on declining. One of my coworker's kids got into trouble by using an ATM card with overdraft and essentiall borrowing over $400 that he did not have. The fees on top of that were large and it was a huge mess. Bob ended up having his son cancel the account, as no one had explained how this worked to them.
BTDT many years ago. I started maintaining the checkbook register better as a result though, but man was it a costly tuition.
If you think you may accidentally overdraft, maybe you can add the option 'quarterly credit' to the account? It's quite common in the Netherlands. You may not have to use it, but if you do overdraft, you are in the red for a lesser percentage then normal. It is a kind of pre-approved creditline from the bank. Usually there are no extra fees involved. You can set a limit, for instance € 500, and have to be 'in the black' 24 hours every 3 months.
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I will decline - my other debit card declines when I don't have money in the account (thank goodness because these are American accounts, and with the Euro / Dollar exchange rate constantly changing, it's barely physically possible to know how much money I have in my account at any given time!).
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