Why Do You Need Overdraft Protection?
Let’s face it — everybody makes mistakes. We may forget to make a deposit or forget that we paid for a particular item. There are a number of reasons why account holders might make a miscalculation — even the financially informed. Overdrawn accounts will incur high overdraft costs, adding to the debt load of the borrower. To avoid this, RMLEFCU offers overdraft protection for account holders as a financial safety net. Here’s why you should get it.
What is Overdraft Protection?
Overdraft protection at RMLEFCU is a line of credit loan attached to your checking account that’s free to set up. It automatically allows you to clear transactions when your checking account does not have enough money to complete a transaction.
RMLEFCU’s overdraft protection has a limit of $100 – $5000 and a 15% annual percentage rate, which is subject to change. Depending on the size of the overdraft protection balance, monthly payments are $50 or 5% of the balance owed, whichever is greater.
How Does it Work?
Say you have $50 in your checking account and you want to make a purchase for $100. Without overdraft protection, you’d have to pay a fee of $28 and fees to the merchant. With overdraft protection, $50 will transfer automatically to your checking account to cover the balance.
At the end of the month, you can pay off that $50 with no fees and only modest interest. This line of credit is extra money that becomes available if needed and can be paid off later with comfortable terms – which is much better than a sudden, expensive fee.
Benefits of Overdraft Protection
The main benefit of overdraft protection is that it helps you pay emergency expenses even if you’re short on cash. The fines or fees you would have incurred if you had made a late payment for temporary money issues can also be avoided.
The introduction of overdraft protection to your account is a realistic, free way to defend against high overdraft fees. However, you should always check your spending habits before you add this optional protection to your account.
You may want overdraft protection if you have a low balance in your checking account and don’t keep a close eye on spending habits. If you are lucky enough to have a cash buffer on your account and make sure your account is tracked regularly, it might not be important to cover overdrafts. Remember that nothing is set in stone; overdraft protection can be added or withdrawn from your account at any time if you are on the fence about this decision.
Watch this video to learn more about RMLEFCU’s overdraft protection services.
If you have any questions, contact us at 303-568-6660 or email members@rmlefcu.org.