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on the interest rate on your credit card State-chartered banks that are members of What do you need to know

What do you need to know Board of Governors of the Federal Reserve System
the Federal Reserve System Federal Deposit Insurance Corporation
and how long you take to pay back the
Board of Governors of the Federal Reserve System
about courtesy overdraft-protection, National Credit Union Administration
advance. Division of Consumer and Community Affairs or bounce coverage, plans? Office of the Comptroller of the Currency
Mail Stop 801 Office of Thrift Supervision
The choice is yours. Consider these ways to • Avoid using these plans as short-term
20th and C Streets NW
cover your overdrafts: Washington, DC 20551 loans—they are costly forms of credit.
Ways to cover Example of possible
(202) 452-3693 • If you overdraw your account, get Protecting Yourself
your overdrafts cost for each overdraft*

Good account management $0

See How to File a Consumer Complaint about a Bank on
the Board’s web site for more information.
money back into your account as soon from Overdraft
as possible. Remember that you need
Link to savings account $5 transfer fee State-chartered banks that are not members to put enough money back into your and Bounced-Check
Overdraft line of credit $15 annual fee + of the Federal Reserve System account to cover both the amount of your
12% APR Federal Deposit Insurance Corporation overdraft and any bank fees.
Consumer Response Center
Link to cash advance $3 cash-advance fee + 2345 Grand Boulevard, Suite 100 • Even if you have one of these plans,
on credit card 18% APR Kansas City, MO 64108
there is no guarantee that your bank
Courtesy overdraft- $20 to $30 1 (877) 275–3342, toll-free
protection plan
will cover your checks, ATM withdraw-
als, and debit card and other elec-
Bounced check $40 to $60 Federally chartered credit unions (those with
($20 to $30 bank fee + tronic transactions that overdraw your
“federal” in the name)
$20 to $30 merchant fee)
National Credit Union Administration
* These costs are only examples. Ask your bank, sav- Office of External Affairs • Good account management is the
ings and loan, or credit union about its fees. 1775 Duke Street
Alexandria, VA 22314-3428 lowest-cost way to protect your hard-
(703) 518-6330 earned money. If you need overdraft
What should you do protection every now and then, ask your
if you have a problem or complaint For state-chartered credit unions, contact your state’s
bank about the choices and services that
about courtesy overdraft-protection, regulatory agency.
are right for you.
or bounce coverage, plans? National banks (banks with “national” in the
If you have a complaint, first try to resolve name or “N.A.” after the name)
Office of the Comptroller of the Currency
the problem directly with your bank, sav- Customer Assistance Unit
ings and loan, or credit union. If you are 1301 McKinney Street, Suite 3450
Houston, TX 77010
unable to resolve the problem, you may
1 (800) 613-6743, toll-free
want to file a complaint with one of the
state or federal agencies responsible for
Federal savings associations and some state
enforcing consumer banking laws.
savings associations
For information on filing a complaint about Office of Thrift Supervision
a bank, savings and loan, or credit union, Consumer Programs
1700 G Street NW
contact one of the following federal agen- Washington, DC 20552
cies, depending on the type of institution 1 (800) 842-6929, toll-free
you bank at. FRB-25000-0904
How do overdrafts and • Pay special attention to your electronic age,” plans so that your checks do not $25 per overdraft, you will owe your bank
$155: $80 + $75 (3 x $25).
bounced checks happen? transactions. Record your ATM with- bounce and your ATM and debit card
drawals and fees, debit card purchases, transactions go through. With these plans,
When you
• write a check,
and online payments. you’ll still pay an overdraft fee or a bounce What are some other ways
• withdraw money from an ATM, • Don’t forget about automatic bill pay- coverage fee to the bank for each item. But to cover overdrafts?
• use your debit card to make a purchase, ments you may have set up for utilities, you will avoid the merchant’s returned-
Banks, savings and loans, and credit unions
or check fee and will stay in good standing
insurance, or loan payments. may provide other ways of covering over-
• make an automatic bill payment or with the people you do business with.
other electronic payment • Keep an eye on your account balance. drafts that may be less expensive. Ask your
for more than the amount in your check- Remember that some checks and auto- bank about these options before making
ing account, you overdraw your account. matic payments may not have cleared How much do courtesy overdraft- your choice. You may be able to:
Your bank (or your savings and loan or yet. protection, or bounce coverage,
• Link your checking account to a sav-
credit union) has the choice to either pay • Review your account statements each plans cost?
ings account you have with the bank. If
the amount or not. If it pays even though month. Between statements, you can Plans vary, but most banks charge a flat fee you overdraw your checking account, the
you don’t have the money in your account, find out which payments have cleared (often $20 to $30) for each item they cover. bank can transfer funds from your sav-
you may be charged an “overdraft” fee. and check your balance by calling And many set a dollar limit on the total ings account to your checking account.
If your bank returns your check without your bank or by checking online or at amount your account may be overdrawn at Ask your bank about transfer fees.
paying it, you may be charged a “bounced- an ATM. Be sure to find out the actual any one time. For example, the bank might
check,” or “nonsufficient funds,” fee. And amount in your account—your account cover overdrafts up to a total of $300, includ- • Set up an overdraft line of credit with
the person or company that you wrote the balance not including any funds avail- ing all the fees. In addition, some banks the bank. You need to apply for a “line
check to—for example, a store, your land- able to you through “courtesy overdraft- charge a daily fee—say $5 a day—for every of credit” just as you would apply for
lord, or the phone company—may charge protection,” or “bounce coverage,” plans. day your account is overdrawn. a regular loan. If you overdraw your
you a “returned-check” fee in addition to the account, the bank will lend you the
Sometimes mistakes happen. If you do Example: Suppose you forgot that you
fee your bank charges you. funds by using your line of credit to
overdraw your account, deposit money into had only $15 in your account and wrote
cover the overdraft. You will pay inter-
the account as soon as possible to cover the a check for $25, used an ATM to get $40
How can you avoid overdraft cash, and used your debit card to buy est on this loan, and there may be an
overdraft amount plus any fees and daily
and bounced-check fees? charges from your bank. Depositing money
$30 worth of groceries. In these 3 trans- annual fee. But the overall costs may be
The best way to avoid overdraft and actions you’ve spent a total of $95—and less than the costs for courtesy overdraft-
into your account can help you avoid addi-
bounced-check fees is to manage your overdrawn your account by $80 ($95 - $15 protection plans.
tional overdrafts and fees. = $80). How much will your forgetfulness cost
account so you don’t overdraw it.
• Link your checking account to a credit
• Keep track of how much money you card you have with the bank. If you link
have in your checking account by
What are “courtesy overdraft- If you have a courtesy overdraft-
your account to a credit card, any over-
keeping your check register up-to-date. protection,” or “bounce coverage,” protection plan, your bank may decide to
draft amount becomes a cash advance
Record all checks when you write them plans? cover all 3 transactions. And each of the 3
on your credit card. You will probably be
overdrafts will trigger a fee. You will owe
and other transactions when you make Many banks (as well as savings and your bank the $80 that you spent even charged a cash-advance fee, and interest
them. And don’t forget to subtract any loans and credit unions) offer “courtesy though it wasn’t in your account, plus the charges on the advance will start imme-
fees. overdraft-protection,” or “bounce cover- 3 overdraft fees. If your overdraft fee is diately. The cost of this option depends