From Money Save Money

Add an overdraft protection as a feature of your bank accounts to avoid the unexpected expenses.

Posted in: Financial News

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Jul 17, 2010 - 1:45:59 AM

When you open a chequing or saving accounts choose overdraft protection as a feature of your bank account to avoid an unexpected expense such as a post-dated cheque cleared by mistakenly or a cheque you have received may take a little longer than you anticipated to clear through your account, also a pre-authorized payment could fall due a day or two days before you have the funds to cover it, for any of these happen the overdraft protection provides peace of mind for those times you need a little extra care to cover a cheque or bill payment because we never know when the unexpected may happen. If you want to get the overdraft protection as a feature in your account, you should maintain a good credit rating.

Your overdraft protection comes into effect automatically up to your limit whenever your account is overdrawn. If your credit is good then you can get the credit approval for the overdraft protection.Overdraft protection provides between $100 and $5000 of protection for most bank accounts. When you make a deposit in to your account, the overdrawn will automatically be applied against your overdrawn balance. The other important thing that the overdrafts must be paid within 89 days, overdrafts are subject to an interest rate of 21% per annum on the overdrawn amount, and subsequent deposits to your account will automatically be applied to pay off the overdraft. Keep yourself protected against temporary cash shortages with your bank’s overdraft protection service. There is no service charge or interest or other payment until you actually go into your overdraft.

The advantages of overdraft protection is the cheques you've written but you don’t have enough money to cover the cheques amount but you have overdraft protection to cover the amount of the cheques then, it will allow you to avoid an NSF fee. You will get your salary next week but your pre-authorized debits of Electronic Funds Transfers (EFT) for loan, mortgage or insurance payments are go through the account this week, in this case your overdraft protection will help you to cover your shortage of the amount of the payment and save you from the penalties. If you use a certain amount of your overdraft, the bank will charge the interest is only charged on outstanding balances most of the banks allow the minimum overdraft limit is $100 and the maximum limit is $5,000.

The overdraft protection is available on most personal chequing and savings accounts. If you are using your overdraft protection in monthly base, for every month that your account is overdrawn, you need to make a minimum deposit of only $100, or the amount that is overdrawn. Also every six months, you must bring your account into a positive balance for at least one full business day. Saturday, Sunday or holidays are not accept as a business days. If your account goes into overdraft, you will be charged $5 for the calendar month in which an overdraft is created in your account. Overdraft Protection helps you avoid charges to your account in the event of unplanned expenses.