Chapter 8 Financial Institutions and Services 185
Overdraft Protection
An overdraft is the act of writing a check for an amount greater than the
balance of the account. With overdraft protection service, a fi nancial insti-
tution will honor a check written by you even if it exceeds your account
balance. Banks normally charge a $25 or higher fee for each overdraft.
Customers can avoid overdrafts by managing their accounts well.
Although overdrafts are not encouraged, some banks offer overdraft
protection. This involves automatically moving money from the customer’s
savings account to the checking account to cover the amount of the check. You
can ask the bank about its policies as well as its fees or charges for this service.
Stop Payment
Upon your request, a fi nancial institution will refuse to honor a check
you wrote. This service is useful if a check is lost or stolen and you want
to prevent others from cashing it. Stop payment is also useful when you
have a grievance concerning goods or services paid for by check. A charge
generally applies for this service, but it may be well worth the cost.
Drive-Up and Mail-In Services
Many fi nancial institutions offer customers the convenience of mak-
ing deposits and withdrawals by mail or at drive-up windows. Drive-up
banking may even be available at times when the lobby is closed.
Safe-Deposit Boxes
Some fi nancial institutions rent boxes in their vaults for the storage of
valuables. Jewelry, birth records, insurance policies, and other important
items are often kept in safe-deposit boxes. This is an important feature if
you need a safe location for valuable or irreplaceable items. Rental charges
for these boxes vary.
Financial Counseling and Special Programs
Specialized services may include a trust department, tax reporting
assistance, and fi nancial planning. Additional offerings may include
money market funds, and mortgage loans. There may be associated fees.
Personal Checking Accounts
When earning a regular income, the fi rst fi nancial service many people
need is a checking account. It offers a safe place to keep your money. It
provides a convenient way to buy goods and services and pay bills, 8-4. It
provides a record of deposits and receipts of payments. Responsible use of
checking accounts aids in money management. It also helps you build a
sound credit rating.