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
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.
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.
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 agenciesthe 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.