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How to Get Overdraft Protection
How does a person get overdraft protection? I already have direct deposit.
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 Contact your bank to find out if it offers some form of overdraft protection. There are three common forms.
- Overdrafts are covered by transfers from a line of credit, which may be an overdraft line, a credit card account, a home equity line of credit or some other form of revolving line of credit. These all require an application and the bank's acceptance of a customer's creditworthiness.
- Overdrafts are covered by a standing authorization to transfer funds from other accounts of the customer in the same bank.
- They are permitted at the discretion of the bank, often to a limit established by the bank, and an overdraft fee is assessed. In this case, the bank allows the account to go negative, with the understanding the customer will deposit funds to cover the overdraft and fees within a relatively short period of time.
Banks may elect one or more of the three services. You should carefully choose when more than one option is offered, and you should thoroughly understand the costs involved for any option. Be particularly cautious about the third option, since it's the most expensive. The overdraft fees can pile up, and, depending on whether you opt to have the overdraft coverage include ATM and debit card transactions. You will have a right to refuse card transaction coverage on and after 7/1/2010.
Published on BankingQuestions.com 2/16/10
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