Circular
Agencies Provide Information on Avoiding Overdraft and Bounced-Check Fees
October 18, 2004
Circular No. 11651

To All Depository Institutions and Others  Concerned in the Second Federal Reserve District:

The federal bank, thrift, and credit union regulatory agencies today announced the publication of a new consumer resource, Protecting Yourself from Overdraft and Bounced-Check Fees.

The brochure’s key message to consumers is that the best way to avoid overdraft and bounced-check fees is to manage accounts wisely. That means keeping an up-to-date check register, recording all electronic transactions and automatic bill payments, and monitoring account balances carefully.

Many banks, savings and loans, and credit unions offer "courtesy overdraft protection" or "bounce coverage" plans so checks do not bounce and ATM, debit card, and other electronic or automatic transactions go through. But most financial institutions charge a flat fee (often $20 to $30) for each item they cover. Even if a financial institution has a bounce-coverage plan, there is no guarantee an overdraft will be covered.

The federal financial regulatory agencies want consumers to know that careful account management is the lowest-cost way to avoid overdraft and returned-check fees and protect their hard-earned money. If overdraft protection is needed every now and then, consumers should talk with their financial institution or a financial adviser about what choices and services are right for them. Financial institutions may provide other ways of covering overdrafts that may be less expensive. For example, consumers may be able to link a savings or other account to automatically transfer funds into their checking account. Consumers also may be able to establish an overdraft line of credit or link a checking account to a credit card.

The brochure is available on each agency's web site to enable consumer groups, financial institutions, agencies, and other organizations download and print copies for distribution to their clients and customers. Single copies of the brochure are available free of charge from Publications, Mail Stop 127, Federal Reserve Board, 20th and C Streets, N.W., Washington, D.C. 20551; 202-452-3245.

Press release OFFSITE
Brochure OFFSITE

Contact:
Maryann Campbell
Supervising Examiner
Legal and Compliance Risk Department
maryann.campbell@ny.frb.org