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What suggestions do you have for dealing with the new overdraft protection rules for bank accounts?
It is important for consumers to understand the changes to overdraft protection, as overdrafts and insufficient funds changes (NSFs) are lucrative for banks — to the sum of $38 billion in 2009, according to Moebs Services.
Bill Hardekopf, of Lowcards.com, suggests consumers carefully review their bank policies. The new overdraft protection rules took effect July 1 for new customers and goes into effect Aug. 13 for existing bank customers.
Hardekopf notes that consumers have until Aug. 13 to opt in to overdraft protection, or they will automatically be opted out. "Opting out means that you do not want your bank to authorize and pay for debit card and ATM transactions when it appears there is not enough money in your account to cover the transaction," he said.
In that case, your purchase may be declined.
Opting in means you want your bank to cover debit card and ATM transactions when there may not be enough money in your account to cover the transaction. As a result, you will be charged an NSF paid item fee, Hardekopf says.
Here are some things Hardekopf says to watch out for:
• Even opting in can mean additional NSF fees, if you have an extended overdrawn account.
• Payment of an overdraft item is still at the discretion of your bank.
• You can opt in at any time.
• An alternative to opting in is — and has been — linking your checking account to a savings account for overdraft protection. Funds are automatically transferred to your checking when there is a lack of funds. This can incur a fee for the transfer, but usually smaller than an overdraft fee.
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