Checking Accounts 101.3 – Cool Extras

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Everything you need to know about checking account overdraft protection.
All things checking – part 3.

There are so many things to learn when you’re getting started with a new checking account! From which type of account to choose, to how to manage the account. Now we’ll take a look at how to find the right checking account overdraft protection and why you need this valuable extra service.

What if I mess up with my checking account?

Back in the day I occasionally forgot to deposit my most recent check on the way home, or forgot to subtract my last Starbucks coffee from my checking balance. Before I knew it, I had overdrawn my account which was now subject to fees for each transaction overdrawn. You can just imagine how quickly the fees accumulated on an account with a typically low balance. For a $3 coffee, no less.

checking account overdraft protection
checking account overdraft protection

Set up checking account overdraft protection

At this point, luckily, I was introduced to the idea of overdraft protection. Even with all of the tools I use to keep track of my account balances, if I did slip up (and I did, many times), my checking account was “protected”  from being overdrawn. I found a checking account with overdraft protection to be the perfect partnership. More importantly, this was the perfect first step towards learning how to properly protect my personal finances.

Once you decide on a checking account and get the hang of using the management tools, the next step is to choose a checking account overdraft protection option to protect your account. Typical options include:

  • transfers from savings account
  • an overdraft line of credit
  • Overdraft Privilege
  • Or a combination of these for extra protection!

Savings Transfer

With savings transfer, you arrange an “Overdraft Protection Transfer” from a savings account you currently have at the same bank or credit union as your checking account. If your checking account is overdrawn, funds will be automatically transferred to your checking account. (A transfer fee applies but is typically much less than an overdraft fee.)

Line of Credit

Some financial institutions offer a personal line of credit linked directly to your checking account. Funds automatically transfer should your checking account have insufficient funds. The bonus about a line of credit is that it’s easy access to additional funds at any time. At Dane County Credit Union, if you use your Kwik Cash line of credit, a low monthly payment of $2 per $100 is required whenever you carry a balance. With no annual fee and a fixed interest rate, this is a great option for the occasional overdraft.

Overdraft Privilege

The third option most banks and credit unions offer is Overdraft Privilege. This would allow you to overdraw your checking account (up to the disclosed limit) for a fee and pay the transaction – saving your from the hassle and cost of a returned or unpaid check. While Overdraft Privilege is not a line of credit, you have given your permission to pay the overdraft as identified in your Overdraft Privilege selection. You can opt for Overdraft Privilege in addition to a Savings Transfer or personal overdraft line of credit. The ultimate in overdraft protection. Times two.

checking account overdraft protection
checking account overdraft protection

One more cool thing you can do with your checking account!

You can pay a friend without cash or a check! Popmoney is an easy way to send and receive money electronically with just an email address or mobile number. That’s it – no exchange of financial information!

Think of friends, family, roommates/landlords. Popmoney is safe, secure, affordable and convenient. It could quite possibly become your favorite way to pay anyone.

At DCCU you can access Popmoney eBanking. Friends and family can opt to access funds through their own financial or with Popmoney.com.

If you are sending money via Popmoney:

  1. Identify who you want to pay and how much.
  2. Recipient receives a notification to claim their funds. (If they’re new, they will create a profile and share their banking information with Popmoney. If they have used Popmoney before, they probably won’t need to do anything else.)
  3. Money goes directly into their account in as little as 1-3 days.

If you are requesting money, a similar process will apply:

  1. Identify who you are requesting funds from and how much.
  2. They are notified to pay the request. (They will also receive a reminder if they forget.)
  3. Money goes directly into your account, and you receive notification that the request has been paid.
checking account overdraft protection
checking account overdraft protection

That’s a LOT of information!

If you are feeling a little overwhelmed by all the checking account options available, ask someone at your bank or credit union for help and advice. They can walk you through various products and services to find the perfect solution for your needs. Whether it’s the basics of a checking account or finer points of the mobile app, the staff are happy to help you better manage your money.

Checking Accounts 101 – Everything You Need to Know

Checking Accounts 101.2 – Account Management Tools

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Hillary W.

Hillary is a 2008 graduate of UW-Madison. She is a proud Badger all the way, but her strong love of travelling led her to a graduate program out in Phoenix, AZ, which she absolutely adored. Now, back in Madison, Hillary is once again connected to her Wisconsin roots. In the winter, you can find her on the ski slopes whenever she has time. In summer, she's on the bike path or enjoying a good book along any stretch of lakefront. Also a passionate Mallards fan, look for her at Warner Park whenever a game is in town!