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Why Bank Overdrafts May Be a Bad Deal For You

Many banks actively encourage their clients with low balances to overdraw their accounts. That means, if the customer writes a check or uses her debit card and has insufficient funds in the account, the bank clears the check by granting a temporary overdraft (a short-term loan), up to a specific limit. The customer is saved from the problems of bounced checks or interrupted shopping sprees. Sounds like a good deal for the customers, right? That's what the banks say. They claim overdrafts are a.