One requirement I did not list on my how to pick a bank criteria was protection, which I would like to clarify.
But as I see it, overdraft protection is not necessarily a necessary monthly expense and I chose to forego the protection my bank offered for a monthly fee.
Here was my train of thought:
If I attempt to overdraft (AKA attempt to spend more $$ than what is in my account), I want to know it! I want the charge to be embarrassingly declined. It will be more embarrassing (and very expensive) to not know I am overdrafting and instead, continue to spend like I’m in the green, when I’m really in the red.
Plus, there are at least two ways to avoid overdrafting.
If I’m really in a pickle, I’ll put the charge on my credit card or —only during emergencies—use $$ from my emergency fund.
The way I see it, overdraft protection is a needless monthly expense and I try to avoid all needless monthly expenses. Instead, I have a protection plan of my own with my low balance alerts and a plan of last resort if my account does—God Forbid—run out.
(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)