Customers who want to keep overdraft protection must now notify bank

If you want to keep overdraft protection for your debit card after this summer, you need to notify your bank.

 

Under new Federal Reserve rules, banks need a customer’s permission to allow debit card purchases or ATM withdrawals to overdraw a checking account in exchange for a fee the customer pays later.

 

The new regulation will apply to new accounts beginning July 1, and existing accounts Aug. 15.
Overdraft protection on debit and ATM cards previously was automatic at Altavista-based First National Bank. Now, in compliance with the new rules, new customers have to opt-in if they want it.

 

William “Buck” Sydnor, senior vice president of branch administration, said the bank has sent letters to current customers asking them to opt-in by Aug. 15 if they want to keep the service. About 25 to 30 percent have done so, he said. “We will be sending additional information to customers to clarify what their position may be,” he said.

 

First National Bank customers can opt in to continued overdraft coverage on the bank’s website, over the phone or by visiting a branch.
“Everybody that indicates that they want to opt in, they receive a written confirmation that this is what (they) elected to do,” Sydnor said. “That prevents any confusion that that’s what they really wanted.”

 

The confirmation letter also tells customers how they can discontinue overdraft coverage if they change their minds. “To us it’s significant that the customer controls it and has a choice of what to do,” Sydnor said.
Sydnor said that overdraft protection provides convenience, but customers should avoid needing it often. “Overdrafts should not be a long-term solution to financial problems,” he said.

 

Other banks are also getting the word out to their customers. StellarOne and SunTrust have posted information on the change online, with links on the main pages of their websites.

 

The information is a little harder to find on Wachovia and Bank of America websites. Both of those banks have chosen to stop authorizing overdrafts from debit card or ATM transactions unless a customer signs up for a service that can take the amount of the overdraw from a savings account.

 

Lynchburg-based Bank of the James and Forest-based Select Bank did not offer the kind of overdraft services that the Fed’s new rule affects. The new regulation does not affect the way banks allow overdrafts by checks or recurring electronic payments, which might pay important bills like mortgages. The Fed made the new rules in response to consumer surveys that showed some customers wanted to opt in before being able to overdraw their accounts through debit card purchases.

 

Published on 15/06/2010 11:37:57