If you have a bank account, you'll want to check the next time you go to your bank to see if they have automatically signed you up for "courtesy overdraft" or "bounced check protection" as part of your account. While the name sounds friendly enough, it's a service that can cost you dearly if you ever are unfortunate enough to accidentally trigger it by bouncing a check.
It's a standard service given to all customers at many banks meaning that you have to opt-out of it on your own. If you try to opt-out, the bank will likely try to get you to keep it by emphasizing that if you accidentally write a check over your account balance, you don't have the embarrassment of a bounced check and you avoid paying any return fines from the store. They will also emphasize that it's a free service. It's free until you actually have to use it.
Banks charge huge fees to cover the amount - from $20 to $40 per check. Some banks will also levy a fee of $5 per day until the funds are placed back into the account to cover the shortfall. If you don't payback the funds within a certain number of days - sometimes as short as a week - the issue can be turned over to a collection agency.
In addition, the bank doesn't have to cover the check so there is no guarantee that the check won't bounce. The amount that they approve for this services varies from $100 - $1,000 and is up to the bank's discretion. The fine print almost always says that the bank reserves the right not to pay a check.
If you are unsure whether or not you're enrolled in a courtesy overdraft protection program, ask the manager at your local bank. If you have been enrolled, ask to be removed. Make sure to follow up your removal request in writing.
If you find that you do bounce a check from time to time, sign up for standard overdraft protection plan. The standard overdraft protection will usually have a yearly fee and with funds taken either from a savings account, a line of credit you have applied for or a credit card. Any fees involved will be much less than with the courtesy overdraft protection.
For more information. please read
Bank Courtesy Overdraft Bounced Check Service
Courtesy Overdraft Protection
