New Overdraft Rules:
Important Information for Consumers and Merchants
On July 1, 2010 the new Federal Reserve Board Regulation E rule will go into effect. This rule requires consumers to opt-in, or affirmatively consent, to their financial institution's overdraft service for ATM and one-time debit card transactions before overdraft fees may be assessed on the account.
If you have not opted-in to an overdraft program (by July 1 for new customers or August 15 for existing accounts), and you do not have the funds in your account to cover an ATM or debit transaction, the transaction may be denied.
What are my options?
If your bank has a practice of paying overdrafts for ATM and everyday debit card transactions, then you will likely have the option to opt-in to their overdraft program. You will receive an opt-in notice with directions on how to do so, with the ability to opt-in via the Internet, by phone or in writing. You can also inquire at your bank to better understand the process.
What if I don't want to opt-in?
If you don't want to opt-in to an overdraft program you don't have to. However, if you do not opt-in your ATM or debit transactions may be denied if there are not adequate funds in your account. If you do want overdraft protection, there are often a number of other choices available to consumers. Many banks provide the option to link your checking account to a savings or another account type. If eligible, you might also have the option of linking your checking account to an overdraft line of credit or a credit card account. Call or visit your bank to inquire about your overdraft protection options.
How can I avoid overdrafts?
The best and easiest way to avoid overdraft fees it to keep track of your transactions and account balance. If you keep extra money in your account -- a cushion -- you will be less likely to overdraw. Some banks offer to send you an alert by phone, email or text message if your balance falls below a designated amount. Check with your bank to find out your options.
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