Beware Auto-Enrollment in Overdraft Protection

Keep tabs on your balance, or you could be forced to pay hefty fees.

Among recent financial reforms, consumer advocates applaud the requirement that your bank ask permission before it enrolls you in overdraft protection. But the rule applies only to debit card transactions and ATM withdrawals. The bank may still automatically enroll you in an overdraft-protection plan to cover checks and electronic bill payments.

That means unless you keep tabs on your balance, you could still be forced to pay a hefty fee—or fees. Banks charge an average of $35 when your balance is inadequate to pay a check that is being processed. More than one overdraft in a single day can trigger multiple charges. For example, at PNC Bank, your first overdraft is $25; the second and any subsequent overdrafts are $36 each.

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Senior Reporter, Kiplinger's Personal Finance