New Bank Overdraft rules — April 2010, reviewed January 2013

Bank regulations on overdrafts have changed.  New rules went into effect the summer of 2010.  It’s important to open the mail since banks will contact their customers about either ‘opting in’ or ‘opting out’ in authorizing and paying overdrafts on an ATM and everyday debit card transactions.

Overdrafts can be very costly — most are between $20 to $35 each!  In the past, some bank automatically enrolled you in their standard overdraft services for all types of transactions when you opened an account.  Under the new rules, the bank must get your permission before you can be charged fees for these services on everyday debit card and ATM transactions.

If you do not ‘opt in’ or agree, your banks’ standard overdraft services won’t apply to these transactions.  What will happen is that these transactions will be declined when you don’t have enough money in the account.  It saves you from being charged overdraft fees.  For some users this lessens the chance of that $1.99 coffee quickly purchased with a debit card costing $31.99!

The new rules do not cover checks or automatic bill payments that you may have set up for mortgage or utilities.  Your bank may still automatically enroll you in their standard overdraft services for these types of transactions.

Stay informed on your banking account options – open your mail!  Make a decision on ‘opting in’ or ‘opting out’.  For more information online read the Federal Reserve fact sheet ‘New Overdraft Rules for Debit and ATM Cards’ at http://www.federalreserve.gov/consumerinfo/wyntk_overdraft.htm