Using credit card for overdraft protection on checking account?

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Using credit card for overdraft protection on checking account?

Postby circle_k » Mon Nov 19, 2012 3:24 am

Is it advisable to connect a credit card to a checking account for overdraft protection?

I was told not to discuss the details, but I was ripped off by someone who got a hold of my debit card. They took $2,000 out of my checking account plus used my $500 line of credit I had for overdraft. I didn't find out for a couple of days, then to my surprise I got 3 overdrafts in the mail. I reported it, but while the bank was investigating I get a notice the overdraft was unpaid and I owed additional fees. I called and the schmucks wanted the $500 line of credit, 3 overdrawn checks and fees paid. When I get a letter about a week later I was expecting it to say the money was back in my account, but instead it showed "demand deposit". they just closed my CD and moved the money to my checking account without me authorizing it, called it a demand deposit and charged me a fee for it.

Well, the next thing I did was I opened a checking account at another bank so I would have a place to deposit my paycheck. Thing is they wanted me to attach a credit card to the checking account for overdraft protection, I'd really rather not have it at all, but it kind of sounded like I had to. When I finally got everything straightened out, I went to US Bank for a savings account. For extra safety, I opened an eBanking checking account with BofA. I opened that account just to keep a few hundred in for a debit card and if anyone gets hold of that one, they can't clean out my whole checking account. At first I picked up a prepaid card from US Bank because it had less monthly fees than their checking account, but I was told this was subprime behavior that would come back to bit you in the @$$ when you try to open a real account or get a credit card.

I really didn't want the debit card in the first place, but then I ended up cashing checks at the window and the bank pointed out cashing checks was also subprime behavior and you must always deposit checks - problem, NO cash. For major purchases like a new suit, I don't have a problem using Amex, but when it comes to the ma & pop shops, I'd rather use cash or debit to save them on merchant fees. I figure a store like JCPenny can pay the merchant fees.

I hope now I'm doing everything okay, my parents think it's stupid I have money in 3 different banks and BofA is several hundred miles from me. I have an Amex green but only use for major purchases which really isn't worth the annual fee. I use a US bank cash+ for my main card and I have a Citi Forward that I rarely use. I put the Citi Forward on the checking account, but I'm thinking now I should go open an account someplace else?????? I really don't want to risk getting that card maxed out when someone robs my account again.

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Postby Gamma » Mon Nov 19, 2012 3:43 am

Who was the bank giving you a hard time with that overdraft problem? Also who was that other bank you opened that expected you to link a credit card for overdraft protection? That's something they shouldn't force you to do to open an account with them. Personally, I wouldn't opt in for overdraft protection because there really isn't any benefits to doing so. Banks charge you a nasty fee and they treat the purchase taken from your linked credit card for overdraft as a cash advance (at least that's how it's treated with my my BoA checking.) I do like that idea you have for using debit/cash for mom & pop stores :)

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Postby Vermonster » Mon Nov 19, 2012 8:47 am

Many banks will offer overdraft protection if you link a checking and savings account. AFAIK They can not touch a CD unless you authorize it. I would ask to talk to a manager and have them explain why they did what they did, and prove that they were allowed too. If they can't prove anything then your next stop would be the Attorney General.

Side story:
I deposited a paycheck for about $800 at the counter, not an ATM. Later in the week I went shopping and spent probably around $400. At the end of the week, after everything had posted, the check bounced. I was charged an overdraft fee for each item, which came to a total of about $750, just in fees. I only found out because on Monday morning I tried to buy a coffee on my way to work and was declined. I spoke to the branch manager and was able to prove that all the transactions happened when I had the money. I also mentioned that I had mailed all my information to the Attorney General with a letter explaining the situation. I got him to agree to refund all the fees as soon as another paycheck brought me out of the red.
Case Freedom $5k
Chase Sapphire Preferred $6.5k
Amex Blue Cash Preferred $12.4k
Citi Double Cash $3.1k

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Postby trumpet-205 » Mon Nov 19, 2012 11:28 am

Vermonster wrote:Many banks will offer overdraft protection if you link a checking and savings account. AFAIK They can not touch a CD unless you authorize it.

Actually when you open a deposit account, its term (written in tiny word at the bottom), basically authorize the bank to use funds from CD and savings account when you default.
In My Wallet:
Citi Forward (12/2010) | Citi TY Preferred (05/2011) | Chase Freedom (11/2011) | GECRB/PayPal (05/2012)
Discover it (07/2012) | AMEX BCP (09/2012) | TD/Target REDCard (10/2012) | Chase Ink Classic (11/2012)
BofA BBR (04/2013) | FNBO/ (02/2014) | Barclaycard Arrival (04/2014) | FIA/Fidelity AMEX (04/2014)

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