What is the protection of balance?

Balance Protection, also referred to as overdraft protection, is a service that many banks offer to its customers to avoid bouncing checks or withdrawals leading to insufficient account funds. A separate type of protection is the type of insurance that offers many credit card companies for which the customer pays a monthly fee. Then, if a credit card holder loses his work or for any reason he cannot make a minimum monthly credit card payment, protection insurance will start and minimum payments will continue to be made for a specified period of time. This prevents the account to become late or go to collections.

Both types of balance protection can be beneficial. A bank that offers a current account balance is generally covered by checks that are registered up to a certain amount without returning the check to the addressee. The person who wrote the check may still be responsible for paying fees for pumping, as well as PThe original amount of check, but will be covered at least a check. People who abuse this privilege can find that their bank already offers this type of balance protection.

Credit Card Balance Insurance may or may not be beneficial for credit card holders. For example, if every month it pays a credit card balance, then this type of insurance may not be necessary because it only adds additional fees to the balance. On the other hand, people with large credit card balances or mild work situations can consider very valuable. It is necessary to carefully read any agreements with the credit card; The costs needed for this type of protection can often differ from month to month as the balance on the credit card changes.

Keep in mind that both types of balance protection are not intended to be used regularly or to support irresponsible behavior in checking accounts or credit karet. They should only be used to back up in an emergency situation to prevent financial errors to negatively affect someone's credit. It is important to carefully consider whether this type of further protection is necessary. Some people create their own protection of balance in a check account simply "hiding" money in the account; For example, one could keep an additional $ 500 USD in a current account without writing to a checkbook.