How do debit card authorization holds on my account work during the weekend or on a holiday? Citizens uses the same process to apply or maintain debit card authorization holds over a weekend as during the week.
How can you avoid paying out big time when you overspend? Protect Yourself Overdrafts happen. And guess what, each of those cases can be the tipping point that drops your account into the red.
Plain and simple, the best way to avoid overdraft fees is to avoid overdrawing your account. These days electronic banking has made overdraft avoidance easier than ever. However, if you do overdraw, there are a few things you can do to keep things from spiraling out of control.
What Is Overdraft Protection? Overdraft protection began when banks had the discretion to extend preferred customers the courtesy of paying for their items when they had overdrawn their accounts.
Eventually, however, overdraft protection made the switch from a generous courtesy on the part of banks to a lucrative financial service. There are several major types of overdraft protection available today.
One thing that makes overdraft protection so controversial is that banks are often able to skirt usury laws with overdraft fees, even though many people feel that overdraft protection is a loan of sorts. Loans are governed by the Truth in Lending Act. But because overdraft protection is seen as a fee-based service rather than a loan, in many cases you could be paying a hefty premium for the right to overdraw your account.
Types of Overdraft Protection The simplest type of overdraft protection is linked accounts. In this case your checking account is connected to another account, such as your savings account. When you overspend with your checking account, the extra money comes out of your savings account to keep you from being in the red.
This is often the best type of overdraft protection, because you avoid paying the bank to use its money.
Banks sometimes charge you a small fee every time your linked account kicks in. A similar kind of protection is the overdraft line of credit. If the linked credit is a credit card, you can also count on paying the cash-advance rate for the money you use.
Ad-Hoc, or bounce protection, is a fee-based service where banks use their discretion and can choose to let you overdraw or allow the check to bounce depending on your status as a customer. The bad side to ad-hoc is that the fees can sometimes be a lot compared to the amount by which you overdraw.
Also, if you use an overdraft line of credit or linked credit card, keep in mind the potential negative consequences of having that extra money on your card. The Bottom Line If you are hit with overdraft fees for linked-account or bounce protection, the easiest way to avoid having to pay is to call your bank and ask.
Of course, the best choice is to not overdraw your account at all, but this is obviously not the easiest answer for many people. Overdraft protection is a huge moneymaker for banks these days, and they know it.
For more, see Pros and Cons of Overdraft Protection.A bounced check is slang for a check that cannot be processed because the writer has insufficient funds. Learn more about Overdraft Protection with answers to frequently asked questions from Citizens Bank. We'll help you understand how Overdraft Protection can help you manage your account and avoid future frustrations and overdraft fees.
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