Q: I haven’t gotten back to my bank about whether or not I’ll opt in on bank overdraft protection. I’m leaning against it, because I’ve been hit with some overdraft fees on busy banking days. How do banks figure out what withdrawals go through and which withdrawals get penalized? — T. Flaherty, Seattle
A: The “deadline” for letting your bank know if you’ll opt in or out of bank overdraft protection was Aug. 15 — but no worries. You can still let your bank know whether you want overdraft protection and they’ll have to honor your request.
Regarding the debit “priority” question, banks really seem to have quite a racket going.
Most big banks line up your bank withdrawals on a given day not by the order you take money out of your checking account, but by the size of your withdrawal (from largest to smallest).
Take the following hypothetical withdrawals you might make on a given day:
- 8 a.m. — Coffee and a donut, $5.50
- 10 a.m. — Dry cleaning, $45
- 1 p.m. — Lunch, $12.50
- 2 p.m. — Your electric bill payment is deducted, $200
- 3 p.m. — Mortgage payment deducted, $1,600
Now here’s how most big banks itemize them:
- Mortgage payment — $1,600
- Electric bill — $200
- Dry cleaning — $45
- Lunch — $12.50
- Coffee and donut — $5.50