If you have a bank account with one of the major banking institutions, chances are that you have been contacted some time in the past month and asked about whether you would like to keep the Courtesy Overdraft Protection active on your account.  Major banking institutions are putting out a media blitz via television commercials and mailings to homes along with charging each of their employees to ask each customer that has not already signed up for the service to indicate their agreement that the service be extended on their accounts. 

Unfortunately, most consumers are not hearing the whole story from the people that are pushing this service.  There are a number of things that the banks do not want consumers to know about Courtesy Overdraft Protection.

Courtesy Overdraft Protection Earns Banks Billions Of Dollars Each Year

A few years ago, many banks realized that they could make tons more money approving debit card overdrafts and charging a fee than they could by turning those transactions down.  Many of the largest banking institutions quietly changed their policies to automatically enroll all of their account holders into this service and made it difficult, if not impossible, to opt out of the service.  As a result, the fees from overdraft charges resulted in a larger and larger percentage of bank profits year after year, fueling large raises and bonuses for those at the top of the management chain.

The Fee Is Typically Much Bigger Than The Transaction That Triggered It

The typical fee associated with Courtesy Overdraft Protection programs range from $27 to $35 per incident.  This fee is paid for each charge that has overdrafted the account, regardless of whether it is a $200 charge or a $5 charge.  As people began to use their debit cards for small, everyday purchases, the number of $35 fees charged for $5 debit card charges skyrocketed, resulting in many individuals unintentionally having to pay $40 for a $5 fast food meal.

Courtesy Overdraft Protection Fees Affect 25% Of Account Holders

In 2008, the Federal Deposit Insurance Corp. conducted a study to find out how many consumers were being affected by the automatic fees generated by Courtesy Overdraft Protection programs.  They found that nearly 1 in 4 checking accounts became overdrawn at least once during the course of the year, resulting in Courtesy Overdraft Protection fees being charged to the account.  Low income individuals, senior citizens, and college students paid the majority of these fees.


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