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Will be Fined, but Will be OK, Right?
When I discovered that all I had was less than $20.00 in my checking account, I put $240 from overdraft protection in it. I am going to be fined $70 in overdraft charges, but otherwise I'm ok, right?
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 If you knew that you had $20 and you would need more than that, taking the amount you needed, $240, may have saved you money. If the advance cost you $70, but the items that were going to come into your account would have cost more, (say five checks were coming in and an NSF fee is $30, that would be $150 in fees) you may have saved money that way.
Do not use the overdraft needlessly. First, it can be costly. Next, excessive use may also tell your bank that you are a riskier customer and they may not want risky deposit accounts. Banks lose money every day when customers overdraw an account, and then change banks without making a deposit. If your bank loses money this way, it may be reported on your credit report, and you still owe them the money.
Overdraft is available in times of need, generally when there is an error in your math. It should not be used as way to borrow and repay for short term needs. Habitual use of the overdraft may inhibit you for getting a loan at your bank. It indicates you cannot afford your current lifestyle.
Published on BankingQuestions.com 9/01/10
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