Many Americans are familiar with overdraft fees: charges levied by banks on overdrawn checking accounts. When a customer overdraws an account, instead of having their card declined, the bank  provides overdraft protection and fronts the money - for a fee. Last year these fees fueled outrage from customers and advocacy groups who noted that charges from twenty to thirty-five dollars were being levied on those who had overdrawn their accounts on even the smallest purchase. This fury was exacerbated by many banks’ practice of processing larger purchases first - as opposed to chronologically - which led to more consumers being charged multiple fees for repeatedly overdrawing their account on small purchases. As part of legislation enacted last year on the regulation of financial institutions, it was mandated that both new and existing customers would be required to opt into such overdraft protection agreements.

Consumer advocacy groups and financial experts have widely recommended that customers avoid such agreements. They argue that having a card declined in the checkout line is not worth the exorbitant fees. Their recommendations to avoid overages include linking a savings account to the checking account, signing up for email and text alerts, keeping reserve money in the account to absorb unplanned payments, and keeping track of funds online.

However, since the law went into effect, more than three quarters of Americans have enrolled in overdraft protection agreements for their checking accounts, and a still higher percentage of those who frequently overdraw their accounts have signed up. Consumer advocacy groups have largely attributed these numbers to  aggressive and sometimes misleading marketing campaigns undertaken by banks to retain their revenue from these fees, which remain a major source of income. Financial experts have noted that for many Americans, overdraft protection provides a simple, though expensive, form of credit for individuals who may not be eligible for home equity loans or credit cards and have no means to secure it otherwise. Some have also argued that having a card rejected or check bounce can create a level of complication or embarrassment that many are unwilling to deal with. Many consumers would rather sign up and pay overdraft fees than be presented with such a scenario.