The Costs and Consequences Of Bouncing A Check

In simple terms, overdraft protection helps you should you write a check and not possess the funds in your account to cover that check. That is the simple explanation. However, there is often more to it than that. This article looks at some of the single issues associated with overdraft protection.

Normally, when you write a check that bounces, the check is returned unpaid to the firm or person who deposited it. Fees are usually required by the party who returned the check and you’ve got to pay those fees. In addition to that fee your bank may also assess a service charge to you for having written a bad check. These fees can add up quickly. Even a small check written for a couple of dollars can suddenly cost you much more by the time you pay all of these fees and service charges. Just in case you are after significantly more help about this topic, click the following link; personal loans kitchener ontario.

Sometimes, if the overdrawn amount is small, and you’ve been with your bank for a very long time, they may go ahead and pay your check, but they’ll still assess a fee for payment. These fees can run from a few dollars to up to thirty dollars or more, per check. This is where overdraft protection comes in handy.

Moving The Discussion Forward

Overdraft protection will it is used to fill a check for you isn’t free in most instances, but it will usually cost much less than bouncing a check. First, because the bank will pay the check (up to a particular amount) the person you wrote the check to will get the funds and not have cause to charge you a fee. The bank for its efforts may charge you a smaller fee for honoring the check but, again, this is normally less than a regular service charge for a dishonored check.

Consumers should understand that even with overdraft protection there is a limitation on how much the bank will carry in overdrafts for you. Once you hit that limit the bank will start to return checks as if you had no overdraft protection at all.

It is also important to realize that if your account is found in the negative (meaning you’ve got a debt to the bank because of overdrafts) any money you put into the account will go towards paying that negative off. In other words, if you’re $200 below zero and you put in $100 of new funds, your account will show a minus $100.

Most banks have a set amount of time that we will help you get the money back into your account. Thirty days is a normal time frame used by many banks before they take action. If you don’t replace the money within that time the bank may begin to charge interest.

If you think the money will not be in your account by the time the payday loan check is cashed, contact your bank and urge them to put a stop payment on the check. The bank will charge you a fee of about $30.00 For doing that, but this is just a one-time thirty dollar fee in relation to the multiple fees you ‘d get if a payday loan lender tried to go into your bank multiple times to obtain the loan money back.

Even though it’s often required that you write a post dated check to the lender prior to being granted for a loan, it’s advised only when the time to pay off the loan comes, you should pay the lender in cash rather than with a post dated check. That way you see the money is going straight from your hand to the bank lender. And you will not have to be afraid of how well you have kept your records for your bank account.

In other words, do not count on the float. ‘ The float is the length of time that passes from the time the check is deposited to the time the check is fully processed and the funds are provided in the payday loan borrowers account. Another way to think about it is on the basis of the time the check goes from being a pending transaction in your account to being a posted transaction. Don’t count on that float time when writing a check to payday loan lenders. That could be a sign that you may not possess the best handle on your money.

Overdraft protection is a useful tool to have but it needs to be used only in emergencies. Its purpose is to safeguard you from higher fees and service charges, and in that role it does a good job. It shouldn’t be taken as a means of quick cash or as a loan vehicle, which many people treat it as. Overdraft protection is a privilege that your bank extends to you and as such it can be withdrawn if it’s abused.