Moebs Services, which is an economic-research company, estimates that banks pulled in $33.3 billion in overdraft fees in 2016. That’s the highest mark since 2010 regulations were passed to limit such charges.
Ed Mierzwinski of U.S. Public Information Research Group says it’s a reminder that you should opt out of using overdraft protection, which covers your checking account if you withdraw too many funds.
Although overdraft protection might save you from an embarrassing rejection of your credit card at Starbucks, banks can reorder the charges that are made to your account, so you rack up big overdraft-protection charges, Mierzwinski says. In other words, a $100 nighttime purchase that drains your account might be listed by the bank as the first purchase that day, instead of the five $5 purchases that you made before it—thus, you end up with five overdraft charges instead of one.
At a typical $35 for each charge, we believe that you seriously should consider declining overdraft protection.