Facts About Bank Card Overdrafts and Credit

Everyone needs credit. You can't purchase a home or a nice car without having good credit. Most people also feel that you need to have a bank account, too. In theory, this is nice, but you can easily get into trouble with bank card over drafts and monthly charges. 

• Some banks will allow you to overdraft your account up to $600 at a time. They allow this because you have steep penalty fees to pay as well as the money that you over drafted to make your account right again. 


• Federal law prevents banks from charging overdraft fees to your account without your knowledge due to excessive bank card use. 


• Before, bankers had an option where they could opt out of overdraft protection so that they could overdraft their account if need be. Now you have to opt in to be able to charge things to your account when there is no money in your account. The only exception to this is if you have enrolled in a merchant's auto-pay where they will take the money out of your account each month automatically. 


• Credit cards have the same opt-in terms if you choose to allow your account to go over the limit. The only exception to this is business credit which has no overdraft protection associated with the account. 


• High and over-the-limit credit and bank amounts can significantly lower your credit score making it difficult for you to open new accounts. Your accounts could also be monitored and closed at any time if you have too many instances of going over your limit.