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Released: November 18, 2011

Help Desk FAQ

What are the Federal Reserve rules on bank overdrafts?

In 2010, the Federal Reserve issued new rules regarding overdraft fees on debit and ATM cards. You can now choose to stop banks from approving debit and ATM card transaction—and charging you an overdraft fee that could be as high as $35—when you do not have enough money in your bank account.

Giving your bank permission to pay overdrafts on debit card transactions and ATM withdrawals is called “opting in.” If you have a joint account, only one of you has to  opt in for 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 will be denied. Recurring online bill payments that overdraw your account, however, will be approved, and can still expose you to a fee.

It’s important to remember that opting in to payment of one-time debit 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 days, 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.

The new rules do not cover checks and automatic bill payments. Banks can still charge overdraft fees for bounced checks or recurring debits made when there are insufficient funds in your bank account—even without your opt-in.

You can opt out of overdraft protection for debit and ATM cards at any time. If you opted in at one time but later reconsider the decision, you can always opt out again. To do so, contact your bank.