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New debit card rules will trip up merchants at point of sale

May 17, 2010

Oregon Bankers Association Offers Tips for Consumers on New Overdraft Rules New Bank Regulation Requiring Opt]in to Overdraft Protection Goes into Effect
Oregon Bankers Association,

Oregonians and Oregon merchants need to be aware of a new federal rule that could lead to a significant increase in debit card transactions being denied at the point of sale. Compliance with this rule is required of all banks. On July 1, 2010, the new Federal Reserve Board Regulation E rule goes into effect, requiring consumers to opt]in to their financial institution’s overdraft protection service for ATM and onetime debit card transactions before overdraft fees may be assessed on the account. This means that financial institutions will be forced to either cease to assume the risk involved in covering overdrafts or, more commonly, offer consumers coverage if they opt]in for the service.

Failure to opt]in to a program means that consumers attempting to make a purchase with a debit card could have their transaction denied at the point of sale, instead of covered by their financial institution, if they have insufficient funds in their account. Overdraft protection programs offered today by financial institutions provide consumers with protection against denied transactions.

This service often involves a fee charged to account holders to cover ATM and debit card transactions when there are inadequate funds in the account. Under the new rule, if an account holder has not opted]in to an overdraft program, and there are not enough funds in the account to cover an ATM or debit transaction, a fee cannot be charged and the transaction may be denied. For new accounts, the opt]in deadline is July 1, while existing account holders have until August 15. Compliance with this new rule is required of financial institutions, which are preparing communications with customers regarding their choices and obligations.

To help Oregonians better understand the new regulation and what their options are, the Oregon Bankers Association offers the following tips and information: Options for Account Holders. Opt]in: If your bank has a practice of paying overdrafts for ATM and everyday debit card transactions, then there will likely be the option to opt]in to their overdraft program. Account holders will receive an opt]in notice with directions on how to do so, with the ability to opt]in via the Internet, by phone or in writing. You can also inquire at your bank to better understand the process. If you decide to opt]in, you will still have the option to cancel at anytime.

. Donft Opt]in: If you don’t want to opt]in to an overdraft program you don’t have to. However, if you do not opt]in, your ATM or debit transactions may be denied if there are inadequate funds in your account. There is often other choices available at a financial institution to protect against insufficient funds in an account. Many banks provide the option to link a checking account to a savings account or line of credit. Call or visit your bank to inquire about your overdraft protection options. Avoiding Overdrafts The best and easiest way to avoid overdraft fees it to keep track of your transactions and account balance. If you keep extra money in your account ]] a cushion ]] you will be less likely to overdraw. Some banks offer to send you an alert by phone, email or text message if your balance falls below a designated amount. Check with your bank to find out what options are available.

More information on the new overdraft rules is available on the Federal Reserve’s consumer information website at About The Oregon Bankers Association Established in 1905, the Oregon Bankers Association is Oregon’s only full]service trade association representing state and national commercial banks, thrifts and savings banks chartered to do business in Oregon. More information is available at

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Discuss this article

Fred May 17, 2010

Great advice as only a banking trade group could give it. By all means, opt in. Use that card, we will cover your $2.00 Starbucks coffee but we are going to charge you $37.00 for the the favor. How about telling people to use online banking to keep track of their balances and to not spend money on retail purchases that they do not have. Oh wait, the banks wouldn’t collect those huge overdraft fees in that case. It is a sad day in America when the Banking industry can’t do any better than this.

Bub May 17, 2010

Having you card denied, especially if you are at a restaurant can mean big trouble. A $20.00 charge is well worth avoiding this disaster.

Greg May 17, 2010

Just for info, Online account is more accurate but that actual depends on bank. Some banks have instant capture, other banks don’t. So, you might not see the transaction on line right away. It could take up to 3 days, longer for international transactions for banks that don’t have instant capture.

The best is to record the transaction in your checkbooks as soon as you get home. I do that(My checkbook is on the computer).

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