Are the rest of you as irritated as I am about the banks sending out reminders to consumers about the new overdraft regulations? As of August 15th, customers have to specifically opt in to their bank’s overdraft protection if they want the bank to process transactions that would send an account into insufficient funds. That’s because NSF charges are big business for the banking industry. The Center for Responsible Lending explains:

In recent years, many banks have offered overdraft coverage as an automatic “feature” on most accounts. Banks routinely cover overdrafts for a flat fee of about $34 per incident, even on the smallest of transactions. Banks and credit unions have followed this overdraft fee recipe to the tune of billions of dollars every year, collecting nearly $24 billion in fees in 2008. The leading cause of overdraft fees is small debit card transactions.

If the bank asks you to opt in for overdraft protection, you should ignore their request. By doing nothing, your account automatically has no overdraft protection. Sure, it might be embarrassing to have your debit card declined at the cash register (assuming that you go shopping without looking at your account balance first), but you’ll save yourself the hassle of paying the bank $34 for a $2 overdraft. That’s just common cents to me.

If banks want to make a profit, perhaps they should look at their bottom line. How much money has your bank wasted sending you notes in the mail, begging you to opt in for overdraft protection? I can’t count the number of letters and e-mails I’ve gotten from my credit union about it. Apparently some people just can’t take the hint.

What’s your take on overdraft protection and NSF charges? I’d love to hear what you have to say.

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