Overdraft is so over

Effective Aug. 15, overdraft protection will no longer be automatic for all debit card accounts. A consumer that has not specifically “opted in” to their financial institution’s overdraft protection program, also known as a courtesy pay program, will be de-enrolled.

That means a purchase that would otherwise trigger a consumer’s overdraft protection will be denied at the point of sale for anyone who either didn’t know that this change was coming or chose not to respond to notifications from debit card providers (the new rules don’t apply to overdrafts from checks or from automatic bill payments). Consumers who decided not to respond to a notification are considered by their financial institution to have opted out of the debit card overdraft protection program.

The change will ensure that consumers have the chance to become educated concerning overdraft protection programs. The opportunity that consumers have to opt-in or opt-out of overdraft programs should mean that consumers have at least had the opportunity to read disclosure statements and other information about the fees associated with an overdraft protection program.

Before making a decision, now a consumer can weigh the value of the product against the costs, and then take the necessary action to opt-in if overdraft protection is desired. A consumer may opt-in at any time, and it’s as easy as calling your financial institution.

There’s little doubt that this change will cause some embarrassment for those caught unaware, and some inconveniences are possible too. After all, no one wants to hold up the coffee line because your $4 purchase was just denied. Before getting too upset though, please remember that this change puts us, the consumers, in the driver’s seat when deciding whether we want to pay closer to $29 or more for that cup of coffee. The opportunity to choose is good news for Colorado!
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Categories: Finance