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Research from Raddon’s National Consumer Research indicates that while many consumers either don’t need or don’t use protection for overdraft and non-sufficient funds (NSF), the service remains valuable to them – if they know about it.

Outlined in an article by The Raddon Report, the research covers trends in consumer behavior regarding potential overdrafts to their checking accounts, dividing them into groups based on the lowest account balance in a typical month – less than $500, $500 to $1,000, and over $1,000.

Since July 2010, when regulatory changes went into effect for protecting consumers from excessive overdraft fees, there has been some reduction in the number of consumers affected by overdraft charges. Some consumers have modified their behavior in order to avoid overdraft, but most have not, regardless of how low or high their checking accounts are throughout a typical month.

As a result of these behavioral changes, overdrafts from checks, debit card purchases, and ATM withdrawals are down in the past two years. Despite this, Raddon indicates the data show these overdrafts are affecting a larger proportion of lower-balance checking account users, even though most consumers who have overdrafts only did so on a limited basis during the two-year period. The most common change made is frequently checking account balances online.

While about 12% of consumers with balances that dip below $500 each month have added overdraft protection, Raddon indicated that half of accountholders are unaware if their bank offers the service. In that same vein, merely a quarter of consumers have elected to “opt-in” for the institution to cover overdrafts in order to avoid having a transaction declined at the point of sale. The article indicated that mostly lower-balance checking users saw the value in this service.

Despite the low numbers who opted in for courtesy coverage or more formal overdraft coverage, the research shows that even the majority consumers with high account balances see value in overdraft services.

Read the full article here.