As of August 15, 2010 banks now have to ask you whether you want to opt in or
opt out of overdraft protection. In the last month or so you should have
received a letter from your bank about this. Even if you have not made a
decision, the Federal Reserve has for you. You will no longer have overdraft
protection at your bank when you make purchases with your debit card.

If you don’t grant permission, your debit card purchases will likely not go
through or you won’t be able to get money from an ATM. You are in better shape
if you have a credit card to use in these cases. But some people do not have
credit cards. The main reason they have started doing this is the exorbitant
fees some customers have been charged in overdraft fees. Many banks have been
charging at least $35 per transaction.

If you are worried, you can ask your bank to link your checking account to
another account at your bank. Then if you do run out of money in your checking
account, assuming you have money in the other account you will be protected.
Some banks may still charge you a fee for this, but it is a much lower fee, like
$5 to $10.

Even if you feel you are financially secure you may still run into trouble.
If someone makes a error in a charge it could overdraw your account without your
knowledge right away. And if you continue spending money without knowing what
the balance with the bank is, you could wind up with overdraft fees.

When it comes to your money, you are the one who has to decide what is best
for you. If you opt in and ask for overdraft protection and are later hit with
overdraft fees, you can always opt out.