Final answer:
The term overdraft protection is misleading because it may imply complete immunity from overdrafts, suggest it is a financial benefit rather than a service with fees, and give the impression of preventing overdrafts entirely or serving as insurance against financial mistakes, which it is not. The correct answer is option C) and D).
Step-by-step explanation:
The term overdraft protection can be misleading because it may imply certain guarantees or benefits that are not entirely accurate. While the term suggests that it provides a form of security against overdrafts, it does not imply complete immunity from overdrafts. Instead, overdraft protection typically allows you to overdraw your account to a certain limit, but it often comes with high fees, making it a costly service rather than a direct financial benefit.
Moreover, overdraft protection might give the impression that it prevents overdrafts entirely, which is not the case; it merely allows for the account to be overdrawn without immediate penalties like a transaction being rejected. However, the customer will typically incur fees for each transaction that overdraws the account. Some may also interpret the term as a form of insurance against financial mistakes, when in reality, it is a service that banks offer, often at a cost to the consumer.
In contrast, deposit insurance, provided by organizations like the FDIC, offers real financial protection by guaranteeing depositor's money up to a certain amount in the event a bank goes bankrupt. This is an insurance system that is funded by the banks paying an insurance premium to the FDIC. Overdraft protection and deposit insurance serve different purposes and should not be confused.