What consumers should know about overdraft protection

Consumers are using their debit cards more frequently to make everyday purchases. While debit cards are a convenient way to access money in your bank account, using them may result in an overdraft and a fee may be incurred.

The best way to avoid overdraft fees is to keep track of your balances and transactions to be certain there are enough funds to cover payments.  By balancing your bank account regularly, you will know if you have sufficient funds prior to making a purchase, but that is sometimes easier said than done.

Most U.S. consumers don’t pay any overdraft fees. According to a 2016 survey conducted by the American Bankers Association, 78 percent of depositors with overdraft protection did not incur any overdrafts. For those times when an overdraft simply cannot be avoided. They include:

  • Take time to understand the fees that come with using overdraft lines of credit or discretionary overdraft programs.
  • Review notices of overdrafts and fees included on your statements.
  • Consider linking your checking accounts to a savings account or line of credit to cover any purchases that exceed the balance in your accounts.
  • You are in control. FTSB offers multiple tools to manage your accounts and avoid overdrawing, including text alerts about low balances and online and mobile access to checking and savings accounts.

*Tips provided by the Iowa Bankers Association.