Survey Says: We Don’t Remember Having Overdraft Protection
Quick: Do you have overdraft protection for your bank account?
If you’re unsure, you aren’t the only one.
New research from Pew Charitable Trusts found that, when following 606 overdrafters, more than half of them didn’t believe they had opted into overdraft protection when they had, and another 8% weren’t sure whether or not they had enrolled.
Overdraft protection is the service banks offer to customers who overdraw their bank accounts through debit card purchases or ATM withdrawals, meaning they spend more than they have. With overdraft protection, the bank will spot you the extra money … for a median fee of $35.
Now that banking regulations require customers to choose whether or not they want overdraft protection–with the associated fees–it’s up to us to remember whether or not we have it. It’s also up to us to keep track of the money we have and to avoid spending money we don’t have, but that should go without saying, considering we’re all tracking our finances with the My Money Center.
Anyway. A solid 90% of the overdrafters admitted they did it by accident (My Money Center, people!) and over a third didn’t realize overdraft protection existed until they were charged a fee.
The New York Times explains that this confusion surrounding overdraft fees comes from the way they are (or aren’t) presented to customers. By doing nothing, your accounts take on the default setting of no overdraft coverage, which means any transactions you can’t cover will be declined, with no fees charged.
We actually recommend this course of action as the lesser of two evils (even if your overdraft protection is “free”). After all, paying $35 to spend money you never had in the first place is a lot worse than being unable to withdraw cash.