Opt-in Overdraft Protection Rule To Take EffectJune 28, 2010
Last November, the Federal Reserve Board announced it's new rules regarding overdraft fees that banks charge. Under the Board's rules, financial institutions must provide consumers a notice that explains the institution's overdraft services, including the fees associated with the service, and the consumer's choices.
Starting July 1, banks must allow new customers to opt-in when it comes to overdraft protection plans on ATM and debit card transactions--beginning August 15, for existing account holders. Depending on when the account was opened, after either July 1 or August 15, bank's standard overdraft practices won't apply, unless the consumer chooses to opt-in to the bank's overdraft protection plan.
Benjamin Lacy is Vice President of Commercial Lending at Community Bank and Trust in Waco.
Currently, it's not uncommon for banks to cover your transaction for a flat fee of about $20-30 each time a customers overdraws his or her account. After the opt-in rule takes effect, it's likely transactions resulting in insufficient funds will be declined, but overdraft fees will not be charged. The new rule allows consumers to opt-in or out of the overdraft protection plan at any time, and banks can't penalize customers for not opting-in.
Overdraft policies can vary from bank to bank. At Community Bank and Trust, customers can set up automatic transfer from a savings account.
The new rules do not cover checks or automatic bill payments. Banks may still automatically enroll customers in their standard overdraft practices for these types of transactions, and depending on the bank, the customer may or may not have the option to cancel.
For KWBU news, I'm Jacqueline Deavenport.