Frequently Asked Questions: New Overdraft Regulation
What
does this regulation mean?
Recently a
regulatory change has occurred that now requires banks to obtain customers’
permission before allowing overdrafts to be paid on ATM withdrawals and everyday
debit card transactions. The new regulation does not apply to overdrafts by
check, ACH, automatic payment, online bill payment, or recurring debit card
transactions.
What
is an overdraft?
An overdraft
occurs when there are not enough funds in the account to cover a transaction,
but the bank honors it anyway. Since we do this at our discretion, we cannot
guarantee that the bank will cover every transaction that may take your account
negative. However, we will, as we always have, continue to honor these
transactions whenever possible.
Why do
banks pay overdrafts?
Banks pay
overdrafts because people often are willing to pay a fee to have important
payments such as those for a mortgage or rent paid, even if they don’t have
enough money in their account, in order to avoid the inconvenience, additional
merchant fees, and embarrassment. For example, you may want the bank to pay a
check or electronic or automatic payment made to a store, mortgage company, or
landlord because if it is returned, you might have to pay a fee to the payment
recipient and also because in the future, your checks or electronic and
automatic payments may no longer be accepted. People may also want their ATM and
other debit card transactions paid in order to avoid embarrassment or to help
them in an emergency or to get through a temporary cash-flow problem.
How
will this change affect the way I do business today?
By choosing to
OPT‐IN, your ATM withdrawals and debit card transactions will work
EXACTLY AS
THEY DO TODAY.
Your authorization provides important protections for you in the event you are
running short of cash, or simply make a mistake in your checking account; your
authorization gives us permission to cover that transaction so you can avoid the
embarrassment of having your transaction declined at the grocery store or at
your neighborhood restaurant. If you choose not to OPT‐IN, any ATM withdrawal
or debit card transaction that forces your account negative will be declined and
an alternative form of payment would be required to continue your transaction.
Why
would I want to authorize this service?
Because you
prefer to have your accounts operate
EXACTLY AS
THEY DO TODAY.
Many customers
appreciate this service because it saves them inconvenience and embarrassment
when making purchases and provides access to funds at the ATM in urgent
situations. A scenario that may affect your Debit Card transaction is as
follows: When you use your debit card to purchase gas, many gas stations
pre‐authorize your debit card transaction for a set amount (for example,
$50). You may intend to only pump $10 worth of gas, but because of the
pre‐authorization, your transaction could be declined if you have less than $50
available in your account. By authorizing this service, you would avoid this
inconvenience at the pump.
What
is the fee if I choose to authorize the service?
The fee is the
same as if the account is overdrawn by check or a pre‐authorized debit/payment
—$25.00 per ATM or debit transaction if we allow the one‐time debit card or ATM
transaction. The fee is a service fee, not a penalty. When we authorize payment
without sufficient funds, there is an element of risk on our part. The fee is
charged to offset that risk.
Do both
parties on a joint account need to agree to the service?
No, any party
on a joint account may make this decision and it applies to all joint account
owners.
Do I
need to sign the authorization (Opt In) form?
Yes, if you
receive a notification by mail, please follow the instructions to OPT‐IN and
mail the authorization form. If you call our Data Processing center or any of
our local branches, our staff will complete an authorization form for each of
your "authorized" accounts, noting "per phone request" on the signature line.
Copies of this authorization will be mailed to you for your records.
Can I
change my option at a later date?
Yes. If a
customer opts in to authorize overdraft transactions, they may opt‐out at any
time by notifying the bank either in person or by calling our Kremlin location
at (580) 874-2244.
What
should I do if I want to authorize The Bank of Kremlin to honor ATM and everyday
debit transactions if I
overdraw?
1.
Visit any Bank of Kremlin branch office:
Complete and
sign an authorization form for each account attached to an ATM/debit card. You
will be provided with a copy.
2.
Telephone requests:
Call our one of
our branches to OPT‐IN, authorizing The Bank of Kremlin to allow overdrafts to
your ATM/Debit Card as described above. The bank will mail you a confirmation of
your request.
3.
Visit our website:
Visit our
website at
www.bankofkremlin.com
and click on Reg E Opt In. If you choose to receive your disclosures in
electronic format, your confirmation will be emailed back to you.
What is
the difference between an everyday debit transaction and a recurring debit card
transaction?
Everyday debit
card transactions are normally for merchant purchases such as groceries, fuel,
and restaurants. An example of a recurring debit card transaction is when a
debit card number is provided to a company for on‐going payment of a utility
bill. Everyday debit card transactions may also be referred to as “POS (Point of
Sale) transactions” and “one‐time transactions.”
If I opt in, will the bank always pay my ATM and everyday debit card
transactions?
No.
These standard overdraft services are an accommodation provided at the bank’s
discretion. Unless you have signed up to link your checking account to another
account such as a savings account, credit card or an overdraft line of credit,
the bank does not guarantee that your ATM and everyday debit card transaction
will be paid even if you opt in.
If I do NOT opt in, does it mean that I will never overdraw my account using my
debit card for ATM and everyday transactions?
No.
There are limited circumstances when it will not be possible for the bank to
avoid paying an ATM or other debit card transaction you made, even if there is
not enough money in your account. You should not assume that because the ATM or
other debit card transaction goes through that there is enough money in your
account to cover it. In these cases, the bank may not charge you an overdraft
fee, but you still must re-pay the bank to cover the overdraft.
Why
does the regulation apply only to ATM withdrawals and everyday debit
transactions?
The regulation
was intended to ensure that customers understand overdraft services when making
purchases at merchants or withdrawing cash at an ATM, providing the choice to
avoid fees by having these specific transactions denied.
What
does this service cost?
There is no
charge to your account if you don't use the service. If you should overdraw at
the ATM or with your debit card, it's the same fee as if the account were
overdrawn by check which is $25 per item.
How does the bank know my debit card transaction is a one-time, everyday
transaction versus a recurring transaction?
The type
of debit card transaction is determined by a special code the merchant submits
with the payment transaction. If the merchant codes the transaction incorrectly,
The Bank of Kremlin will not know and will process the transaction as
instructed.
If my
transaction is declined do I still get charged?
No, if an ATM
or everyday debit card transaction is declined there is no charge. Many
customers appreciate the ability to overdraw at the ATM for family emergencies.
They also appreciate us paying their items because it can save them the
inconvenience and embarrassment of a declined transaction.
May I opt in at the time of the debit card transaction?
No. You
must “opt in” in advance. The Bank of Kremlin is required by regulation to
provide you written confirmation of your opt in request and will not change your
account record until that confirmation is sent. If you think you will want your
ATM and everyday debit card overdrafts paid and are willing to pay for it, you
should opt in before you need it.
Are
there any other fees assessed? I noticed some additional fees on my account.
There are no
additional fees unless the account has a negative balance for more than two (2)
consecutive business days. After that, a daily overdraft fee of 18% of the
overdrawn balance is assessed per day until the account has a positive balance.
How
many overdrafts will the bank cover? How big an overdraft will the bank cover?
We strive to
honor as many of these requests as we can. We look at a number of factors like
how long a customer has been with us and the deposit history of the account.
How can
I avoid overdrafts?
The best way to
avoid overdrafts is to keep a current and accurate transaction register and
balance it to your monthly statements. Also, be sure to record automatic
payments, bill pay transactions, debit card purchases, etc. Information from
online banking, telephone banking, or ATMs can be very helpful sources, but they
do not reflect outstanding transactions that have not yet been posted to your
account. If you need any assistance with learning how to reconcile your
statements, we will be happy to help you.
What if
I don’t do anything?
If we do not
receive a response from you, we will decline any everyday debit card and ATM
overdraft items beginning on August 15, 2010.
What if
I don’t have a ATM or debit card, do I still need to opt in?
No, the
regulation only applies to personal accounts which have been issued a debit
card.
I have
a debit card, but don’t use it, do I still need to complete the form?
Yes, the
regulation applies to all account holding debit card whether it is used or not.
Does
this change apply to business accounts?
No, all of
Regulation E including this amendment is a consumer regulation only. It does
not apply to business accounts. This includes Sole Proprietorships,
Partnerships, Corporations, LLCs, LPs, etc.
For additional Information:
The Bank of Kremlin
580-874-2244
8am – 5pm Monday - Friday
Important Details about The Bank of Kremlin ATM
and Everyday Debit Card Overdraft Coverage:
Beginning 8/15/10, we will no longer authorize and
pay overdrafts for ATM withdrawals, debit card purchases and everyday debit card
transactions without your approval and acknowledgement that you want continued
coverage for these transactions. An insufficient funds fee of up to $25.00 for
each item causing an account to be overdrawn may be imposed for covering
overdrafts that result in a negative end of day balance. A fee of 18% will also
be charged beginning on the second business day after the occurrence of the
overdraft as a “daily overdraft fee”. Overdrafts may be created by check,
in-person withdrawal, automated clearing house (ACH) or electronic transaction,
phone or internet banking transfer or withdrawal, ATM withdrawal, debit card
withdrawals and usage or other electronic means. You must pay your overdrawn
account balance in full upon demand. Whether an overdraft will be paid is
discretionary and we reserve the right not to pay.
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