Overdraft protection is a feature a financial institution or a bank provides to customers when the balance in the account does not have enough money to pay for the most recent transaction(s).This feature may or may not cost extra.
Example: You purchase a pair of new shoes. The total amount for the shoes is $98.56. The purchase is approved, but you only have $86.32 in your checking account. The difference of $12.24 will be paid by the bank, until you deposit the $12.24. If you have ‘overdraft protection’ on the account.
If you do not have ‘overdraft protection’ your account will be overdrawn by $12.24, and additional fees may be added for you to also pay because you now owe the bank $12.24. When an account is overdrawn, banks add fees because, you did not have enough money in the account. Additional fees can start at $5 and up. These additional fees can increase daily until the money is collected from you to cover the $12.24, which will have increased because you did not have enough money in the account to begin with.
As we approach the holiday season, be mindful of the balance in your account(s). Check your balance daily and keep a record of what you are buying and the amount. Hint “there’s and app for that”.
As always keep your mind on your money! www.lalanonprofit.org