Overdrafts are out: What does that mean for your preauthorized purchases?

Starting this August, if you try to use your debit card to make a purchase without having the funds in your linked checking account, that purchase will be declined. Right in the store. Or the restaurant. No longer will your bank be able to approve the transaction and then hit you with a $35 overdraft fee -- unless you decide that you want to be able to charge without having the funds, and opt in – signing on some dotted line to signal that you want this protection.

Now you have to understand that for the banks, these $35 fees add up to $20 billion in annual revenue. That's why The New York Times reported last week, that your bank is going to try to convince you to join this new party. It will try to raise your level of fear, using words like "protection," and "emergency," and sending letters like the one from Chase quoted in the Times story, which read:

"Your debit card may not work the same way anymore, even if you just made a deposit. Unless we hear from you. If you don't contact us, your everyday debit card transactions that overdraw your account will not be authorized after August 15, 2010 -- even in an emergency."

I, for one, will not be opting in. And I don't believe you should either. Fees like this (which, despite improvements in credit card legislation can still top the amount of your purchase) are outrageous. With the widespread (and typically free) availability of online banking, you ought to be able to keep close enough tabs on the money in your account that you don't overdraw. In most scenarios.