New Bank Regulations help Customers Avoid Fees
Overdraft fees have been a hot topic over the past year. And for good reason. Some banks have been allowing customers to make repeated debit card purchases and ATM withdrawals when they don't have the funds available in their accounts. The banks cover these transactions—often without asking the customer—and then charge overdraft fees.
On January 1, 2010, new rules on bank regulations will take effect to help begin reforming overdraft coverage. In addition, there are more rules that have been proposed but have not yet been approved by Congress. But what can you do to protect yourself from overdrafts in the first place? Read on to find out.
What are the new rules?
You might soon be hearing more about Regulation DD. It's a regulation implementing the Truth in Savings Act that requires banks to disclose important information about deposit accounts. It was designed to help you make more informed decisions when choosing an account. And under new rules to that regulation, banks will be required on January 1 to start sharing the following information with their customers:
Disclosure of overdraft fees
There are two kinds of overdraft protection. One kind is provided through a line of credit that covers overdrafts by making advances on the line of credit. The other kind of overdraft protection is where the bank, in its discretion, pays your overdrafts but then charges an overdraft fee to your account. This second kind of overdraft protection is often called "discretionary overdraft protection."
Does your bank provide discretionary overdraft protection? And do you currently receive it? If so, your bank will need to tell you on your account statements how much you've been charged for all items that have been presented for payments and exceeded your account balance—for both the statement period and for the calendar year-to-date.
EverBank® offers an Overdraft Protection Credit Line. There are no overdraft fees for the line. Instead, this variable line of credit automatically transfers credit advances to your FreeNet® Checking Account to cover overdrafts. So rather than paying an overdraft fee, you pay interest on the credit line balance based on the prime rate as published in the "Money Section" of the Wall Street Journal plus a margin. And it's automatically repaid from your deposit account when funds become available. You also need to opt in for this protection and need credit approval for this line of credit. Learn more about this credit protection.1
-
Disclosure of account balances
Any time your bank shares balance information with you through an automated system—such as an ATM, the bank website, or an automated telephone system—the bank must report the actual total amount that's in your account. It cannot include any funds that would cover overdrafts. This will help you know the true balance you can spend without using overdraft protection services.
EverBank is getting an early start on this change. Starting on October 18, 2009, customers will be able to see their available balance without overdraft protection funds in the Online Financial Center.
Even with these new protections in place, how can you further protect yourself from overdrafts and their fees? Here are a few ways:
- Check what your bank offers for overdraft protection
You might already receive overdraft protection on your accounts—and not know it. Some banks offer automatic overdraft protection. Take a look at what your bank offers as well as the fees they charge for the service. If you don't agree with the terms of their automatic protection, you may be able opt out of the service.
- Balance your checkbook regularly
If you know exactly how much money you have available, you're less likely to overdraw your account. So keep a close eye on your funds by balancing your checkbook. Keep a register of the transactions in your account. Then compare that register to your monthly statement. Or check it regularly against your transaction history through online banking.
- Set up automatic account alerts
Some banks—like EverBank—allow you to set up e-mail or SMS text message alerts on your account when your balance hits a certain amount. If your bank offers this service, consider setting up an alert. It can warn you if your balance reaches an amount where you're close to overdrawing.
- Use mobile banking to check your balance before you buy
Want to buy something but are unsure of your account balance? If your bank offers mobile banking, you can check your balance on your Internet-enabled cell phone. For example, with Mobile Banking through EverBank, you can use the same User ID and password that you use to sign on to the Online Financial Center to check your account balances any time and anywhere you have a cell phone signal. If you need to, you can even transfer funds between your EverBank accounts so you have funds available.
- Leave a cushion of cash in your account, just in case
Consider keeping an extra $100 to $500 above your account's minimum balance at all times. When you do, you're less likely to overdraw. And if you notice your account getting close to your cushion amount, you can transfer money into that account or use another method of payment, if necessary.
- Use a credit card instead and earn rewards points
To keep from thinking about overdrafts altogether, use a credit card that you pay off at the end of each month, when you need to buy something. You might even use a rewards credit card. That way, you can build up points for every purchase you make. If you don't have one, consider the EverCard® Visa® Platinum card (subject to credit approval). It offers one of the nation's most flexible rewards programs2 with unrestricted travel options. And you can conveniently pay off your balance at the end of the month through the Online Financial Center.
-
- EverBank, the EverBank Infinity Sphere and the EverBank logo along with EverTrade are proprietary service marks of EverBank. All rights reserved.
