Avoid Overdraft Fees

Know how much money you have in your account! Be sure you have enough money in your account to cover all checks you write and all withdrawals and purchases you make with an ATM or debit card.

An overdraft fee is charged when you write a check or make a withdrawal from an ATM or use your ATM or debit card to make a purchase for more money than you have in your account. In some cases, a fee may be charged every time you try to take out more than is in your account.

The benefit of a bank declining the purchase saves you money. Here is an example:

If Jane purchases a latte for $2.50, but only has an account balance of $1.00, the transaction will result in her account becoming overdrawn. Her account balance would have a negative balance of $1.50. If the bank paid the $2.50 debit card transaction and charged her a typical overdraft fee of $35.00, Jane's latte would cost her $37.50 ($2.50 + $35.00 = $37.50). When a bank declines the transaction they will save you the cost of the $35.00 overdraft fee (and not allow you to purchase the latte with your card).

New Federal Rules on Overdraft Protection

Beginning July 1, 2010, for new accounts (August 15, 2010, for existing accounts), your bank must get your permission to enroll you in their overdraft services for debit card and ATM transactions before you can be charged overdraft fees (they can still charge for overdrafts on checks or automatic bill payments). If you agree (“opt in”) to be covered by overdraft protection, you will be allowed to withdraw funds, but will be charged if you don’t have enough money in your account to cover the cost. If you do not agree (do not opt in), your attempt to withdraw from an ATM or use a debit card will be declined if you do not have enough money in your account to cover the request. It is your choice!

Tips for Avoiding Overdraft Fees

No matter whether you choose to "opt in" for overdraft protection, or decide not to be covered, you can avoid overdraft fees by being careful with your account. Here are some rules to protect yourself from overdraft fees:

1. Keep track of your spending. Don't rely on the balance at the ATM, which may not be up-to-date. If you use online banking, that can be a useful source of information on your bank balance.
2. Keep a cushion in your account -- aim for at least $50 extra.
3. Give time for deposits to be credited. A check deposited in the morning does not mean money is available to be spent that day. It may take several days to "clear" and be available for your use.
4. If you really run into an emergency, that is the time to dip into your cushion or use a credit card. Overdrawing is NOT the only option.

Features That Help You Avoid Overdraft Fees

Banks and credit unions that link savings accounts to cover overdrafts from a checking account, with no fees when funds from the savings account are used to cover a transaction:

• Verity Credit Union
• Watermark Credit Union
• Woodstone Credit Union

Banks and credit unions that allow you to sign up for text messages or email messages to alert you when your balance is low (you may have to sign up online and bank online):

• Bank of America
• Chase
• Columbia Bank
• KeyBank
• Verity Credit Union
• Watermark Credit Union

Banks and credit unions that offer a "checkless" account where only an ATM/debit card available:

• Chase
• Express Credit Union
• KeyBank
• Woodstone Credit Union

Banks and credit unions that notify customers at an ATM that they will be charged if they are withdrawing more than the available balance:

• Bank of America

No overdraft fee is charged if the total amount overdrawn in one day is less than:

• $10: Bank of America, Express Credit Union
• $25: Pacific International Bank