Customers at banks are often enrolled in a program known as overdraft protection. The idea is that when a transaction accidentally runs over into red or negative territory, the bank steps in and pays the transaction without the need for customer intervention. People who do not use checkbook registers often make such mistakes in using the ATM or check card.
The way it works is that although the bank pays off the transaction, a fee is charged for the service. This fee is usually not disclosed clearly to the customers, except perhaps hidden in the conditions and disclaimers which is difficult to read or understand. The benefit to customers is that they get worry-free transactions but must pay a high cost for each one that uses overdraft protection.
The result is that there were many customers who were more angry at the high fees rather than relieved when their transactions went through with the help of overdraft protection. The anger was especially acute when the transaction was for a one dollar cup of coffee and the overdraft fee was more than $35.
However as of 2010, new regulations have abolished the automatic enrollment of customers into overdraft protection. Now banks must seek explicit consent of their customers to enroll them in these programs. The federal program has gone further by ordering certain banks to pay back all these fees to their customers. Banks are appealing the decision of course.
The abolishing of automatic overdraft protection means customers have to watch more carefully how they spend their money. One way is to monitor the checkbook register or transaction register closely.
Another way of tracking money carefully is to use checkbook software. It duplicates many of the functions of the register but uses also the advantages of a computer. Past records can be easily pulled up and sorted. The disadvantage is that the software needs a computer although small hand-held devices may soon make that possible on the go.