Popular Posts

Chase’s New Overdraft Policy - Potential Gotchas for Customers


Chase has announced a change to their overdraft protection service. At first glance, the change may look like it will reduce fees for most Chase checking account customers. The change may reduce overdraft fees, but many customers may be hit with more fees from their Chase savings accounts.

Here’s an overview of the overdraft policy changes that Chase provided:

Chase Overdraft Policy Changes

The first potential gotcha will be Chase checking account customers who don’t have a Chase savings account and are using their Chase credit card as the backup funding account. If they don’t open a savings account, overdrafts may result in declined transactions and nonsufficient funds (NSF) fees.

A less obvious gotcha may hit customers who do have Chase savings accounts.

A federal regulation limits certain types of withdrawals from savings accounts to six per month, and that includes automatic overdraft transfers. For this reason, banks generally charge a fee for each transfer that occurs after the sixth transfer. In the case of Chase, this fee is called the Savings Withdrawal Limit Fee, and it’s currently $5 per withdrawal.

One important feature of this overdraft policy change that increases the likelihood of customers being hit with the Savings Withdrawal Limit Fee is the amount that will be transferred from the savings to checking account. Currently, automatic transfers are generally in $50 increments. After the overdraft policy change, the exact amount needed to cover the transaction will be transferred. Thus, small checking account withdrawals, like everyday debit card transactions, will likely trigger more overdraft transfers.

One important feature of this overdraft policy change that increases the likelihood of customers being hit with the Savings Withdrawal Limit Fee is the amount that will be transferred from the savings to checking account.

Here’s an example of how this overdraft policy change may trigger more overdraft transfers, and thus, more Savings Withdrawal Limit Fees. Under the current policy, if a debit card purchase of $10 triggers an overdraft, a $50 transfer from the savings to checking account will provide a balance of up to $40 in the checking account. This provides a small cushion for additional purchases. If additional small debit card purchases are made, no overdraft transfer will be necessary. Under the new overdraft policy, each debit card purchase may trigger an overdraft transfer which may quickly add up to over six.

A better policy for customers would be if the bank declines everyday debit card transactions that would cause an overdraft transfer even if the customer has overdraft protection.

Chase actually has two types of overdraft policies. One is called Overdraft Protection and the other is called Chase Debit Card Coverage which covers everyday debit card transactions. As required by federal regulation, banks cannot charge fees for everyday debit card overdrafts unless you have opted in to consent to fees on these types of transactions.

A Chase customer may have chosen not to opt in to debit card coverage so that everyday debit card transactions will be declined if there isn’t enough money in the checking account to cover the transaction. However, if the customer chose overdraft protection to avoid returned checks, the overdraft protection will also be applied to everyday debit card transactions even if the customer didn’t opt in to debit card coverage.

With the new Chase overdraft policy, everyday debit card transactions may cause many overdraft transfers from the savings account. This is due to the fact that under the new policy, the exact amount needed to cover the transaction will be transferred. The higher number of overdraft transfers will make it more likely that the customer will exceed the limit of withdrawals allowed from the savings account which will cause a fee for each withdrawal.

The Bottom Line

The overdraft policy change at Chase should help some customers. The removal of the overdraft transfer fee is a nice change. However, Chase checking account customers shouldn’t depend on overdraft transfers especially if they are active debit card users. Under the new overdraft policy, active debit card users may still end up paying fees.

Free overdraft transfers can sometimes not only save consumers fees, but also allow consumers to earn more interest. This requires that the savings account have an interest rate that’s high enough that it’s worthwhile to maintain a large savings account balance and a small checking account balance. That’s not the case for Chase where the standard savings account has a very low interest rate (currently 0.01%).

  |     |   Comment #1
Why would anyone that is a "regular" on DA have any overdraft protection?  Either I can't manage my check book OR someone forged my signature OR ....   In any event I instruct my bank to refuse to honor any overdraft!  I'll gladly "initially" pay a fee but Chase will be sued for honoring any forged signatures!
Reality check for anonymously
  |     |   Comment #15
You're So Perfect
  |     |   Comment #19
You are an employee of Chase.
  |     |   Comment #2
PNC bank has even worst sneaky fees, they call it courtesy pay, what they do is pay the shortfall and wait for you to pay it back within 24 hours, if the overdraft is not paid in 24 hours and even if you do not have overdraft agreement with the bank the fees kick in.
You can not opt out of courtesy pay and fee agreement it is under account agreement under discretionary pays.
I closed all of my accounts with them because of that courtesy trap.
  |     |   Comment #3
Banks are a business just like any other.....They can charge whatever fee they want and have every right to make a profit. If you whiners don't like it then start your own bank.
Reality check for anonymously
  |     |   Comment #16
Why don't YOU start your own bank since your you know everything about Banking and you're so perfect with your account you've never had to overdraft wow that is amazing. Your bank would be the absolute best bank there is in America. Lol
  |     |   Comment #17
Not ever having a bank overdraft is not amazing, just SIMPLE MATH.

I or my wife have never had a single overdraft in our life. Simply a matter of knowing how to add and subtract while balancing a checkbook, although I do notice that is a vanishing skill among millenians.

Overdraft fees. Just one more fee I pay no attention to along with EWPs for CDs.
  |     |   Comment #21
As a matter of fact, NO THEY CAN NOT CHARGE ANY FEE THEY WANT! Like the dairy industry can charge whatever they want for milk .
There are a multitude of Federal and State regulatory commitees and agency, in place, to protect consumers.
For example:
At the federal level, there are five financial industry regulators:

Comptroller of the Currency (OCC)
Federal Deposit Insurance Corporation (FDIC)
Federal Reserve System (FRS)
National Credit Union Administration (NCUA)
Office of Thrift Supervision (OTS)
At the state level, each state has an agency or agencies that are charged with supervising and regulating state-chartered banks and thrifts. For example, in California, financial institutions are regulated by:

Department of Financial Institutions
A listing of state bank supervisors for all states is available at:

Conference of State Bank Supervisors
These federal and state banking regulators have oversight over a wide array of banking institutions and activities. If you are interested in an overview of the regulatory authority for a specific type of banking institution by key types of regulatory activities, let me recommend the Federal Reserve Bank of New York’s online matrix of Banking Institutions and Their Regulators. This publication allows you to view a list of banking institutions and see their primary regulator(s) for several types of regulatory activities:

Selected Banking Institutions:

National Banks
State Member Banks
FDIC-Insured State Nonmember Banks
Non-FDIC Insured State Banks
Insured Federal Savings Associations
Insured State Savings Associations
Non-FDIC Insured State Savings Associations
Federal Credit Unions
State Credit Unions
Bank Holding Companies
Savings Association Holding Companies
Foreign Branches of U.S. Banks
Edge Act Corporation
U.S. Branches and Agencies of Foreign Banks
Selected Regulatory Activities:

Chartering & Licensing
Mergers, Acquisitions & Consolidations
Reserve Requirements
Access to the Discount Window
Deposit Insurance
Supervision & Examination
Prudential Limits, Safety & Soundness
Consumer Protection.

Here's the link that explains what banks can and can't do and charge.
Next time, know what your talking about, before you bully everyone in a discussion, by calling the group
"whiners", cause you'rejust showing you're ignorance!
  |     |   Comment #4
How is this a "gotcha"???????   It's pretty clear what is needed-a savings account. Or.......Here's a thought......HAVE ENOUGH FUNDS IN YOUR ACCOUNT TO COVER YOUR DEBITS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!  It's not that hard, people. Stop whining and making excuses for your failures. I have never once in my life had an overdraft fee.
  |     |   Comment #5
No risk, no gain
  |     |   Comment #7
The bank costs per customer per year is about $300 to maintain it and keep it open.
If there are not ignorant and absent minded customer to pay for your account maintenance fee, it will cost you $25 per month in maintenance fees, it is as simple as that.
  |     |   Comment #9
Well aren't you lucky. Life is just that simple for you.
Calling out anonymously
  |     |   Comment #13
I'm going to remember all your postings if and when trouble hits. You think you're safe you think your money safe you can't think like that . It can hit in many different ways at any time! We have money in our checking account it goes to bills we get backed up but if something was to happen we will be with the ones that will make it. People like you will be whining and crying because you have no idea what to do which would lead to deep crap! just like someone said in another post good luck because your day will come. It happens to everyone even my father that was in a prominent only gas business for over 26 years lived in over 6000 sqft home and had to downsize to little less than 3000 sqft but we had each other. You're like a all year-round Scrooge. What I'm trying to say is rather than Downing people because they have money issues at times like almost every human except you. Keep to the subject and open your eyes. And oh yeah grow a heart
CC in CA
  |     |   Comment #6
I miss WAMU!  I closed all of my Chase accounts and moved my money to credit union(s).  Chase was OK, considering they are comparable to other big banks these days, but I simply didn't want to keep hassling with requirements to avoid fees (minimum balance, direct deposit, etc.).  No thank you...  it's credit unions for my REAL money.
Reality check for anonymously
  |     |   Comment #14
Now we're talking . If I have to have a bank account it's going to be a credit union I'm in the middle of changing my bank account just trying to figure out which credit union I want. My fiance already has a credit union that is affiliated with his line of work.
  |     |   Comment #23
Credit Unions are get caught doing shady things, as well.
You have to go with a small, local CU, not a large national brand. Good luck.
  |     |   Comment #24
Credit unions want minimumbalances and direct deposit, as well, along with a membership fee. There is no longer any difference.
Still got practice the good ole' hoop jumping.

Good luck
  |     |   Comment #8
I see why you are anonymous,bad things happen to good people. Keep living you will have your day
  |     |   Comment #10
Regardless of what banks charge, they are still using the customer's money to do other business with, and make loads of money loaning it out again. You, as a customer are allowing a bank to use your hard earned money. And they hardly if ever pay you for using it. They shouldn't be charging you anything at all unless it is a blatant misappropriation of your doing.
  |     |   Comment #20
I view any sort of banking interaction with Chase as a potential "gotcha". At Alliant, if I overdraft my checking, it costs me $3 for them to take the money out of my savings account. It is not unusual for me actually to make use of this low fee in order to facilitate profitable money movements containing race conditions usually won, but not every time. If I lose it costs me three bucks. If I win, which most often happens, I make significantly more than three bucks.
  |     |   Comment #27
Can u use a chase debit card with no money in it at store and it will work
  |     |   Comment #28
Someone answer bubba
who that who u
  |     |   Comment #29
If u have overdraft protection.. they will allow “some purchases” to go through. So that’s a yea Bubba!

The financial institution, product, and APY (Annual Percentage Yield) data displayed on this website is gathered from various sources and may not reflect all of the offers available in your region. Although we strive to provide the most accurate data possible, we cannot guarantee its accuracy. The content displayed is for general information purposes only; always verify account details and availability with the financial institution before opening an account. Contact [email protected] to report inaccurate info or to request offers be included in this website. We are not affiliated with the financial institutions included in this website.