Consumer Reports says with new bank regulations, checks are being processed faster than ever. That means a lot more bounced checks.
Now banks are touting a new service called bounce protection.
But Consumer Reports says it's not the same as traditional overdraft protection. When you're writing a check, knowing you have bounce protection sounds good. But a new bounce protection service is being offered by more and more banks has people hopping mad.
Consumer Reports' Laura Washington just took a close look at bounce protection and found this new service is not such a great deal.
Bounce protection is a sort of short term, high interest credit. Banks can attach it to your account without your authorization. You might not even know it's on the account.
If you bounce a check, bounce protection still requires you to pay an overdraft charge, typically anywhere from $20 to $35. And you may be charged a fee, as much as $5 each day your account is overdrawn.
That's the equivalent of an exorbitant interest rate.
The new bounce protection service can also kick in at the ATM. If you go to make a withdrawal and you don't have sufficient funds, you'll get the money anyway.
Consumer Reports says to protect yourself from bounced checks, tell your bank you want to sign up for traditional overdraft protection.
You'll either apply for a line of credit or sometimes the bank will link your checking account to your credit card or savings account and the money will be taken from these sources.