Nowadays, more Americans are living from paycheck to paycheck and struggling to make ends meet. Even with the best of intentions and balancing checkbooks, an occasional overdraft is a common occurrence. One way to help ensure that you will not suffer the embarrassment or the stiff financial charges associated by accidental overdraft is by using your credit card to help cover the balance.
Overdraft protection on checking accounts has existed for decades as a way to help prevent consumers from bouncing checks and making ob time payments. Usually, there is a fee a bank will charge you to set up this type of credit line. By utilizing a credit card for overdraft protection you may be able to get the coverage you want at a price you like (which would be free). The cost may not come from setting up the account, but may come from what the credit card company charges for cash advance fees.
If you are in the process of deciding whether you want to set up a standard credit line for overdraft protection through your bank or to utilize your credit card, do a little research first. Call your bank and make sure that they allow you to use a credit card as a type of overdraft protection, since not all banks offer this service. If they do, then you can definitely set up one.
Ask your bank what the fees are for checks that are overdrawn and how much they charge to establish a check-coverage line of credit. Then inquire with your credit card company to find out what their cash advance fees are because that's the system that will kick in to cover the difference of the overdrawn check. Compare the numbers because one may be more cost effective than the other.
Getting some type of overdraft protection on your checking account is a great tool to have that will save a lot of your time and money. Credit cards are just one method of overdraft protection, so investigate the pros and cons and take advantage of it.
