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Overdraft Regulation Change FAQ's

Q: Why do I have to do this?

A: A revision to Federal Regulation E was created so that consumers could choose to allow or not allow banks to authorize ATM and everyday debit card transactions if the account had insufficient funds and would be charged a fee for that service.

The regulation states that we need to receive permission (or as the regulation calls it, “opt-in”) from customers to continue to allow use of this service on an account. If you do not opt-in, we will not be able to approve card transactions that make an account negative, and your card will be declined.

Q: So by not opting-in I'll never have a negative balance because my ATM or debit card will be declined?

A: Not necessarily! There are a few ways that an ATM or Debit Card transaction can cause your account to be overdrawn even with an opt-out:

  • A preauthorized transaction (i.e., paying at the gas pump, adding a tip at a restaurant bill, or receiving a hotel reservation “hold”) could cause a negative balance. In these situations the business preauthorizes a transaction amount that might not be the final transaction total. A gas station might preauthorize $1 when you pay at the pump. If you have $2 in your account the transaction will be approved because the preauthorized amount is less than your balance. If you then spend $20 on gas your account will be overdrawn by $18. If you opt-out you will be responsible for the amount of money overdrawn but you will not be charged a fee.

  • An overdraft can also be caused by the timing of actual presentation (processing) of the transaction to your account. You may have sufficient funds in your account at the time of the transaction, but by the time the transaction is applied to your account, there may no longer be enough money to cover the transaction. This would cause a negative balance or an overdraft situation.

It is important to keep track of your transactions by keeping accurate records with monitoring and reconciling transactions frequently. Online Banking is a great way to see when transactions are applied to your account.

Q: Is there some other way I can have these kinds of transactions accepted without having an overdraft fee charged?

A: Yes. We encourage our customers to have a savings or money market account at First State Bank. This account can be linked to your checking account so funds can be automatically transferred to your checking account, allowing the item to be paid without causing an overdraft. If you have a savings or money market account at a different bank, we are happy to assist you in transferring to First State Bank to take advantage of this service.

Q: How does this affect Overdraft Privilege?

A: Overdraft Privilege will continue to cover checks, recurring online bill payments and ACH payments. By opting-in you will extend the overdraft service to include ATM and everyday debit card transactions. Please note: By not opting-in to ATM and everyday debit card transaction overdraft coverage, you are NOT opting-out of Overdraft Privilege for checks, recurring online bill payments and ACH payments. If you do not want to receive Overdraft Privilege, you can complete an additional form. Please contact us for more information.

Q: Can I change my mind?

 A: Sure! You can change your decision at any time by contacting the bank and completing a new form. However, it is important to note that changing your consent does not require the bank to waive or reverse fees that were incurred prior to the opt-out request.

Q: What if I have a combination of different transactions that cause the overdraft? Are you going to charge a fee if I do not opt-in?

A: The bank may charge an overdraft fee for checks, ACH, and recurring debit card or online bill pay overdrafts as normal. If one of these types of transactions causes an overdraft, we will charge our normal fee.

I currently have Overdraft Protection Sweep; does this apply to my account?

A: It shouldn’t. When you use Overdraft Protection Sweep, an overdraft will not occur. There may be a rare instance that the Overdraft Protection Sweep account is low. In these situations, the opt-in or out status is very important because if you have opted-out, that transaction will be declined, if you opted-in, the transaction can be authorized and processed with an overdraft fee.

Q: What if I have more than one account?

A: You may complete a different form for each account or list all of the accounts on one form. Please make sure to include the full account number so that there is no confusion on which account you would like to opt-in or out.

Q: Can I have different choices for different accounts?

A: Yes, you may have different choices for each account.

I have a joint-account. Can one of us opt-in and one opt-out?

A: No. The account can only have one choice even if you have two or more ATM or debit cards. It is important to note that we will recognize the option chosen in the last communication from the account, determined by the date on the form.

Does the rule apply to all personal accounts, including savings or money markets?

A: Yes. The rule applies to all accounts covered by the new regulation, including savings and money markets to the extent that they may be overdrawn by an ATM withdrawal or debit card transaction.

Q: What about Business Accounts? Does this regulation apply?

A: No. Currently this regulation does not apply to business accounts.

Q: Does this affect my checks, recurring online bill payments or ACH payments?

A: No. These items will still be paid by the bank at our discretion. You may be charged our normal overdraft fee per transaction for this service.

Q: Can I opt-in during an ATM or everyday debit card transaction that is being declined?

A: Yes-during regular bank hours. Simply call the bank and opt-in by phone. We will make the change and the transaction will need to be run through again. We will then send you a written confirmation by mail of your consent to opt-in. A fee would be incurred when the transaction posts to the account. You do have the opportunity to avoid the fee by depositing money to cover the transaction prior to that day’s cut-off time (4:00 pm) at each location, Monday-Friday.


Click here to download the Opt-In form