Banks use scare tactics to get you to sign up for overdraft protection

As we've told you previously, new rules about bank overdraft "protection" programs kick in this coming July. The new rules basically say you have to voluntarily sign up to let your bank keep processing debit card transactions even after your account falls into the red and also charge you around $35 each time.

It seems like a no-brainer, right? Why would you sign up for a service like this? Well, because banks have started alarming their customers with direct mail that makes not signing up sound very, very scary. The New York Times has a story that details some of the scare tactics banks are pulling out.

Maybe you've already gotten one of these letters (or more than one!). If not, and if you don't want to click on the Times link, here's the short version: They'll warn you that your debit card might not work. (Of course, it only won't work if you don't have any money in your account.) They use words like "emergency" to make you think of the worst possible scenario, and they underline words and use red ink a lot.

In other words, this is just a lot of hype. There are plenty of other ways you can protect yourself if your account runs low and you have an emergency, points out Kathleen Day, spokesperson for the Center for Responsible Lending.