Overdraft Coverage? You Choose!

overdraft protectionCongress recently passed a bill which was full of regulatory changes designed to protect the consumer. One of those changes regarding overdraft fees will have a noticeable immediate impact on consumers who use banks and their services via an ATM or Check Card.

I recently logged onto US Bank’s banking website to do my online banking transactions for the week which is pretty routine. As I looked over my current balance and recent transactions, I noticed a red text alert at the top of the page. The text alert was giving me notice about upcoming changes to the ATM and Check Card overdraft coverage. Once I clicked on the link there were two paragraphs on the new page. The first paragraph was short and simple. The bank wanted a YES or NO answer from me regarding my preference for overdraft protection. The second paragraph was more informative. It read as follows “Federal regulations now require banks to obtain your consent to authorize, pay and charge for ATM and everyday Check Card transactions. These rules will take effect August 15 for existing accounts.”

Immediately following the legal notice, I was prompted to choose my preference by selecting YES if I would like US Bank to cover my ATM and Check Card purchases in the event I have insufficient funds in my account. The other option is selecting NO and they will not authorize the expense and cover the bill. I selected NO. However, after reading the fine print, there are still three areas of account overdraft protection that are still covered as part of US Bank’s standard overdraft coverage. The defining factor is that you now have control over the two ways most people overdraft the most, ATM transactions and everyday Check Card transactions.

In addition to the above change, banks will also be changing their fee structure for overdrafts. For example, US Bank will be reducing their total fee from up to $37.50 to a slightly lower fee of $33. The total overdraft fee will be based on the dollar amount of the overdraft. If you overdraft your account by $20 or less, the fee will be $10 for each overdraft item. For every item greater than $20, the fee will be $33 for each overdraft item. Lastly, there will be a $25 per week fee beginning the 8th calendar day and each additional week the account is in the red.

Although I made these changes with US Bank, I still need to make the same change with each financial institution I bank with. Be aware, change with one account does not cover all of your accounts if you bank with multiple institutions. Please be sure to inquire with your financial institution to find out what exactly is changing and by how much. If you find yourself on the fence when it comes to choosing YES or NO, I would highly recommend choosing NO. By not having that added sense of ‘security,’ you will force yourself to keep a better account of your finances or risk being denied at the register.

Which will you choose?…