Overdraft Protection/Line of Credit
Overdrawing your checking account is very unpleasant experience and can happen for many reasons. For whatever the reason, an overdrawn account inevitably produces some negative consequences. It can be very embarrassing if a transaction is declined or if you receive a letter from your bank declaring your account has "non sufficient funds". In addition, your bank will charge you a pretty hefty penalty for each NSF check that was written. In addition, you may incur a second NSF fee from a creditor if a payment check ends up being declined. You also may receive another late penalty if a new check is nor received in time. The best way to protect yourself is with Overdraft Protection, sometimes called a Personal Line of Credit.
One can apply for overdraft protection to be attached to their checking account. The lender will review the application and (if qualified) approve the credit line for a set amount. If an individual attempts to access funds that are not currently available in his account then the overdraft line of credit will automatically cover the needed funds up to the approved limit. This will greatly reduce the chance of bouncing any additional checks. The cost for this protection varies from none, i.e., using a credit card to cover the funds, to a set fee and possibly interest for the funds being used.
Overdraft Protection offers protection from embarrassing and costly fees associated with overdrawing your checking account and also provides an emergency line of credit. It is a convenient and cost effective way to ensure that your checks will all be accepted. These funds are generally offered at a significantly lower rate than an average credit card.