As we’ve addressed on Consumerism Commentary before, the Federal Reserve will be requiring banking customers to opt-in to overdraft protection. The highly publicized date of the change is July 1, but this is only the date by which new customers must be free from certain overdraft fees without opting into the service.
Most of us have existing accounts, and the date we need to be concerned about it August 15. This is the deadline for banks to refrain from charging an account holder overdraft fees without explicit consent.
Banks want their customers to opt in, so they will make it as easy as possible to do so. For example, I received a pamphlet from TD Bank, where I have a checking account with a debit card, explaining how I should proceed to let the bank know that I want to be able to use my debit card to pay for something without having the funds to cover the purchase.
TD is offering a program called “TD Debit Card Advance” which covers customers who use a debit card to overdraw their account by more than $5. The bank fronts the money, which must be paid back, and charges a $35 fee. This is the same fee that is currently charged for an overdraft.
Furthermore, the pamphlet states that an overdraft fee can be avoided by making a cash deposit or account transfer by the cutoff time of the current business day pertaining to the local branch.
This change doesn’t affect customers who link a savings account to a checking account for overdraft coverage unless that savings account does not have enough funds.
I have no plans to enroll in the program. There’s no need to introduce more fees into my life, even if they are only potential fees. If I were to use my debit card, I’d prefer the purchase to be declined. That may not have been the case over ten years ago when I had no money in any bank account and still needed to pay for food and transportation.
Do you plan to choose to maintain your overdraft protection by opting in?