Q: I still haven’t decided whether to opt in or out on overdraft coverage on my checking account. I know it’s down to the last minute, but what are key factors? I’m getting a ton of notices from my bank, so I just want to make the right decision, and get it out of the way.
— A. Piedo, Newark, N.J.
A: We’ll get to the question of whether to opt in or out, but the fact that you’re getting so much mail on the issue is probably intentional.
Banks do a great deal of market research, and try to identify candidates for overdraft protection who may generate some hefty fees.
According to a recent study from Action Marketing, 63% of bank overdraft users (i.e. people who have used overdraft protection services in the past) want the protection, compared to the 57% who don’t.
Action also says that only 28% of bank customers are “absolutely certain” they understand their bank’s overdraft protection.
Banks see a big opportunity to keep customers in their fee-rich programs, so they’ll bug you and steer you toward opting in, as much as they possibly can.
But here’s the thing: Banks are also getting savvy about identifying their best prospects. Acton Marketing says the bank consumer most likely to overdraw is a white woman in her 30s or 40s who doesn’t own a home and earns roughly $50,000 of income.
That’s rather precise, but also reflects just how well the banks are figuring out which opt-in chickens to pluck.
Consider this notice from Chase (Stock Quote: JPM):