With so many banking fees that you may need to pay these days it may be very frustrating to discover that yet another banking service in the form of overdraft protection is offered with, you guessed it, another fee attached to it. Often times when we're trying to cut back on expenses we have a tendency to rationalize about whether or not we need certain services. So many people who have checking accounts wonder if some of these services are actually practical. They may wonder why overdraft protection is useful for online banking.
Why Use Overdraft Protection
When you have overdraft protection on your checking account you avoid the risk of having a negative balance as a result of your transactions. Very few people actually plan to bounce a check but almost everyone has experienced it at one time or another; and when it does, you're faced with huge fees charged against your account. If your bank honors the charge you'll have to pay an overdraft fee and if they don't you'll not only have bank fees imposed but merchant fees as well. But do you really need it? If your balance is like that of most people and it is often hovering just above the negative, this option could keep you from being embarrassed when standing in the checkout line or having the ATM machine shut you down.
The Pros
The advantages of overdraft protection depend largely on your personal spending habits. If you're someone who uses your card for every transaction made, it may be possible in the course of a day to chalk up loads of overdraft fees if you don't have protection. But if you're self conscious about being turned away from the register when the bank declines your charge you'll definitely want to have the protection.
When considering why overdraft protection is useful for online banking you must also factor in emergency situations. People don't plan for emergencies of any kind and you never know what expenses will arise unexpectedly. You could have car trouble, you may need emergency medical treatment, or you may have to leave town in a hurry. When you have overdraft protection you will be able to cover those expenses without having to run around looking for a source of extra cash. This is even more important when you have an online bank where you can't go in and talk to someone about an emergency loan.
But while overdraft protection can help in numerous circumstances, you still have to take extra care to manage your money. If you get too relaxed about the service you might find that you're spending more money on the protection than the money you're paying for your bills. There are many reasons why overdraft protection is useful for online banking but you'll need to analyze your personal circumstances to see if it's the right decision for you. The banking industry is changing at a rapid pace and everyone needs to pay close attention to these changes and adapt to the new changes when you feel they will be to your benefit.