Released: January 14, 2019

Help Desk FAQ

What are the Federal Reserve rules on bank overdrafts?

You can prevent your bank from approving debit card transactions that would overdraw your account and result in an overdraft fee (which average around $30) by not "opting in." Giving your bank permission to pay overdrafts on debit card transactions and ATM withdrawals, even if there is a fee involved, is called opting in. If you have a joint account, only one of you has to opt in for "courtesy" overdraft protection to be in effect.

If you do not opt in, and you do not have enough money in your bank account, point-of-sale transactions and ATM withdrawals will be denied. Checks, recurring payments and online bill payments that overdraw your account, however, can still be approved and expose you to a fee, without your opt-in.

It’s important to remember that opting in to payment of one-time debit card and ATM withdrawal overdrafts does not mean that you will have an affordable repayment schedule. The money that the bank advanced, as well as the fees, must be paid in a few day or you may be charged another fee. Any money you owe will be “grabbed” from your account by the bank when your next deposit is made.

If you opted in to debit card overdraft protection at one time but later change your mind, you can always opt out; just contact your bank.