BBB: Deadline Approaches for Consumers to Opt-In for Overdraft Coverage

Online, June 28, 2010 (Newswire.com) - This week brings the first of two major deadlines for new rules regarding the way banks, credit unions and other financial institutions charge overdraft fees. The new regulations address concerns that some bank customers did not understand that approved debit card transactions could cause an overdraft and the imposition of an overdraft fee. As the deadlines approach, Better Business Bureau serving Eastern North Carolina (BBB) urges consumers to carefully weigh their options before electing overdraft protection.

Banks are now required to seek consent by July 1 for new customers and August 1 for existing clients before providing overdraft protection to their accounts. If the account holder wishes to opt-in, the bank will "cover" ATM transactions and one-time debit card purchases when there is not enough money in the account. This service can help consumers avoid the potential problems caused by bouncing a check, but can also be costly as many banks will charge fees of $30 or more for each transaction that costs more than is in the account.

If the bank's overdraft questionnaire is not returned by a consumer by the deadline, or if a consumer fails to express a preference, banks automatically consider the consumer to have opted out of overdraft protection. By opting-out, consumers will be denied any purchase if there is a lack of available funds.

"The new regulations give consumers more control of their ATM or debit card transactions, but the decision to opt-in or opt-out requires consumers to examine their spending habits," said Beverly Baskin, President and CEO of BBB serving Eastern North Carolina. "If you choose to opt-in, overdraft fees could be larger than the overdrawn amount if you are prone to overdraft, however; if you opt-out, you risk having debit card purchases and ATM transactions denied if you lose track of the amount available."

Overdrafts of bank accounts are preventable. BBB provides a few suggestions to help consumers avoid overdrafts:

• Track your balances daily. Many banks have websites that allow you to see what is going through the account, minute by minute.
• Consider signing up for low-balance alerts. These services can let you know about a potential problem.
• Keep a cushion of cash in your account, for times when you need it, or if you make a mistake.
• Link your account to a savings account or line of credit from your debit account.

The BBB urges consumers to contact their banks for more information about their overdraft coverage. For more information on the new law, the American Bankers Association has produced an informative fact sheet on its Web site at http://bit.ly/9qkVAZ.

For more consumer tips on finance and credit, visit http://easternnc.bbb.org/consumer-tips-finance/.