Financial Update (Fourth Quarter 2004)


 Appraisal Reviews
 Maintain Soundness

 GLBA Spurs
 Banks’ Insurance

 Conference Focuses
 on Remittances

 New Fed
 Brochures About
 Check 21

 Fed Distributes
 Redesigned $50s

 Atlanta Fed Chair,
 Vice Chair

 Will Privacy
 Concerns Prolong
 Cash Use?

 Fed Governor
 Sees Oil Prices
 Staying High

 Greenspan on
 Challenges of
 Aging Population

 Helping Consumers
 Avoid Overdrafts

 Examining Fannie
 Mae and
 Freddie Mac


 Data Bank

 Circular Letters



Brochure Shows Consumers How to Avoid Overdraft Fees

In a move aimed at helping consumers fend off high fees for overdrawn checking accounts, the Federal Reserve and other financial institution regulators announced publication of a new brochure, Protecting Yourself from Overdraft and Bounced-Check Fees.

The no-cost solution
The key message is simple: good account management is the lowest-cost way to avoid fees assessed for bounced checks and overdrafts. The brochure offers several tips for managing a checking account: keeping an up-to-date record of all transactions (checks, ATM and debit card transactions, online payments, and so on), keeping track of the balance, and reviewing account statements monthly.

Agencies announce bounce protection guidance
Web version of the brochure
Other consumer information from the Federal Reserve

“Courtesy” is not free
But even careful consumers may find their accounts overdrawn from time to time and may take advantage of the “courtesy” overdraft or bounce protection plans that many banks offer. The chief advantage of these plans is that they help consumers avoid the expense, the embarrassment, and the possible damage to their credit record of having a check returned. But the plans can be quite costly: Most still impose a flat fee for each overdrawn or returned check. This fee, the brochure notes, is often $20 or $30 per check, and the receiver of the check may charge that much for a returned check.

Cheaper alternatives
The brochure advises consumers to ask their banks about other, less expensive ways of covering overdrafts. These include linking a checking account to a savings account or credit card account or establishing an overdraft line of credit so that funds from those accounts are automatically transferred when needed to cover overdrafts.

Online and print brochures available
The brochure is available on the Web site of each of the sponsoring agencies—the Federal Reserve, the Federal Deposit Insurance Corp., the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision. Single copies of the printed brochure are also available free of charge from the Fed at Publications, Mail Stop 127, Federal Reserve Board, 20th and C Streets N.W., Washington, D.C. 20551.