Overdraft Protection can be very COSTLY

[DHK]

Many (if not all) banks offer credit cards as overdraft protection for your checking account. This can save you in fees ranging from $15 to as high as $48 (BofA). However, the balance you carry on that credit line IS CONSIDERED A CASH ADVANCE (with applicable fees and interest rate).

However, you can circumvent that if you use a standard personal line of credit (instead of a credit card). This way, your interest rate is the SAME as your interest rate on your CL.

[Anonymous]

Here is something that I have been wondering about pertaining to overdraft protection with a credit line.

I a $500 line of credit/overdraft protection with Pentagon Federal Credit Union (PenFed).

I spoke to a customer service rep from PenFed and they told me that I have the option of just writing the check and the line of credit will kick in as overdraft protection or they can transfer the funds over the phone from the line of credit to my checking accout. They reassured me that either way is fine.

My concern is whether or not that writing a check that taps into (or rather bounces) my line of credit is going to trigger a "bounce check" that is reported to Chex Systems.

PenFed told me that utilizing the line of credit in that fashion would not result in a bounced check that is reported to Chex Systems.

Somehow, I was just skeptical of that and I requested that the funds be transferred into my account (instead of my purposely "bouncing a check" in order to tap into my line of credit).

Is my fear unjustified?

Any comments or thoughts would be appreciation (not necessarily with PenFed but with any other financial institution).

[Ravenous Wolf]

The above was actually my post... I didn't realize it put me down as guest. I was wondering why it allowed me to post without me even logging in...

[DHK]

Here is something that I have been wondering about pertaining to overdraft protection with a credit line.

I a $500 line of credit/overdraft protection with Pentagon Federal Credit Union (PenFed).

I spoke to a customer service rep from PenFed and they told me that I have the option of just writing the check and the line of credit will kick in as overdraft protection or they can transfer the funds over the phone from the line of credit to my checking accout. They reassured me that either way is fine.

My concern is whether or not that writing a check that taps into (or rather bounces) my line of credit is going to trigger a "bounce check" that is reported to Chex Systems.

PenFed told me that utilizing the line of credit in that fashion would not result in a bounced check that is reported to Chex Systems.

Somehow, I was just skeptical of that and I requested that the funds be transferred into my account (instead of my purposely "bouncing a check" in order to tap into my line of credit).

Is my fear unjustified?

Any comments or thoughts would be appreciation (not necessarily with PenFed but with any other financial institution).

The rep is correct - because you already set up some financial backing in case of "the check that got away". I use my overdraft protection all the time, and nothing is reported to Chex because I have my credit and/or savings resources already established.