Overdraft Protection

Colonial offers customers protection with the Colonial Protect plan that helps keep you from experiencing unexpected overdrafts with a special line of credit that you pay back each month. A recent study completed by the Pew Charitable Trusts found that more than 50 percent of individuals who had overdrawn their checking accounts did not understand that they had signed up for fee-based overdraft protection. As with any financial matter, it’s important that individuals take the time to understand the services that their financial institutions offer and that they measure the cost of the service compared to its value to determine whether it’s appropriate for them.

What Is an Overdraft?

An overdraft transpires when an individual attempts to make a charge against his or her account but the balance falls below the charge or check being presented. When this occurs with a check, the check can be declined as NSF, or insufficient funds, which creates an NSF charge. When it occurs with a debit card transaction, the transaction can be declined at the store and no penalty will be imposed by the financial institution.

What Is Overdraft Protection?

Overdraft protection is a service that your financial institution offers that permits them to move money from your savings or other connected accounts when presented with a charge that you have insufficient funds to cover. By moving the money from another account into the account you’re attempting to use, the financial institution ensures that your checks are paid and your debit card transactions are not declined.

Overdraft protection is not a free service. Financial institutions charge anywhere from $15 to $40 for every transaction in which they must move money from other accounts. It is also an opt-in program, which means that it is not included by default on your accounts.

Alternatives to Overdraft Protection

You can avoid using overdraft protection by keeping good records of the transactions in your checking account. This will be a more accurate reflection of your current balance than many financial institutions provide through online services, which may not account for all transactions, such as checks that have not cleared. Another way to prevent overdraft is to keep an unused balance of several hundred dollars in your account at all times. By keeping this cushion, you ensure that there is a backup plan in place for accidental overspending.

If you think it’s worth it to pay a fee in order to avoid the social ramifications of declined charges and you can afford to pay this fee, then overdraft protection might be a great plan for you. However, if your budget is tight or you simply want to use your money for something more important than avoiding a declined charge, talk to your financial institution representative and make sure that you’ve opted out of the service.

Avoid Unexpected Charges with Colonial Protect

When your checking account is charged for a payment in excess of your balance, funds are advanced to your account in $100 increments up to your available credit line, assuring you will never bounce a check or miss a payment. The total amount of your credit will depend upon qualification standards applied when you open your account.

Each month you will receive a Colonial Protect activity summary with your checking account statement. If you have a balance, your minimum payment is 10% of your outstanding balance, or $25, whichever is greater. You may also check your Colonial Protect activity conveniently with the Colonial on the Move app. If you do not pay by the due date shown on the statement, the minimum payment will be automatically deducted from your account. If you have questions about your accounts, give us a call or stop by.

Nobody wants to be surprised with unexpected charges. That’s why it’s important that individuals fully-understand the costs and services that their banks offer so they can avoid charges and other unexpected fees.


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