By YOUNG MONEY Staff
17 November 2010

Overdraft protection isn't seeing many takers, Consumer Reports says.

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 requires banks to ask customers if they want to opt in to the service, which lets accountholders overdraw their accounts but charges a fee (usually about $30) if they do.

Since the opt-in provision of the Credit CARD act took effect, just 22 percent of consumers have signed up, Consumer Reports found.

The magazine applauds the 78 percent of people who have shunned the service. Often, it says, banks offer options - like account linking, which lets people whose accounts run dry draw on a credit card or line of credit - that are much more affordable than overdraft protection.

"The FDIC has concluded that the fees assessed for these other types of programs are significantly lower than for automatic overdraft loan programs," Consumer Reports notes.

Overall, debit cards are growing more popular. Forty-three percent of consumers plan to rely on them this holiday season, the National Retail Federation found; just 27.3 percent expect to use primarily credit cards. But overdrafts are a real risk for debit card users - and it's smart to determine how best to avoid them.