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Why You Should Have NEVER "Opted-In" To "Overdraft Protection"

Tuesday, November 22, 2011 - 11:57 AM
Why you should have NEVER "Opted-In" to "Overdraft Protection"

In July 2010 the Federal Reserve Regulation "E" prohibited banks from charging overdraft fees, if a customer overdrew an account via ATM/Debit Card use.

Banks are allowed to get around this rule only if the customer naively gives approval for these fees by "Opting-In" to "Overdraft Protection".

Banks use subversive marketing language to make it appear that "Opting-In" is for the customers' benefit. Gotcha!

If you "Opted-In" for "Overdraft Protection", the bank will now temporarily fund your overdrawn account for you (a temporary loan) and will then charge you maximum overdraft fees. 

This means that if you swipe your ATM or Debit Card and the transaction overdraws your account balance, you will have no clue because the transaction will go through as normal.  But at that moment you are now liable for the extravagant & recurring fees of an overdrawn account, which can repeat daily.  This is a costly form of loan to you.  You could get better loan fees with the mafia.

If you would have instead "Opted-Out" of "Overdraft Protection", your card-swipe will decline the transaction if it would cause your account to be overdrawn.  THERE WILL BE NO FEE.

Suggest that people contact their banks and immediately "Opt-Out" (or "Decline All"), and keep a copy of the proof.  Some banks have this setting available online.

Better to have a no-cost declined card-swipe, than to be clueless and plundered.

Note: This recommended "Opting-Out" of "Overdraft Protection" law does not protect you from fees for overdrawing your account by check or bill-payment. For these, the Fed has not provided any protection to customers. These fees will be found on the bank's disclosures & fee schedule.

Reference: FRB: Consumer Information: What you Need to Know: Overdraft

Bank of America example of overdraft "services" (these "services" are actually fees)
Bank of America | Please Select Your State

Ken has many articles on this subject.  Search for "overdraft regulation".
waywardwayward49 posts since
Feb 17, 2011
Rep Points: 144