Time to Choose – Declined Card or Overdraft Fee?

What's Hot


2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

You're soon going to have to make a choice: to have your debit card refused when you're out of cash – or to pay 30 bucks for overdraft protection if you exceed your balance.

Aug. 15 is fast approaching – and with it a big decision by bank customers whether to “opt in or opt out” of bank overdraft programs.

On that date, the Federal Deposit Insurance Corp.’s new “Regulation E” program, which requires banks to get the OK from customers to provide overdraft protection on nonrecurring debit card transactions and ATM withdrawals, is set to launch.

Some say regulation E is a long time coming. “Often people use their debit card without knowing how much money is in their accounts,” says David Garber, financial center manager with Fifth Third Bank. “Under Regulation E, if you haven’t opted in – and there’s no money in your account – your transaction will be denied, rather than going through and you paying an overdraft fee.”

As far as deciding to opt in or opt out, it’s increasingly apparent that a majority of bank customers can’t make up their minds. According to a June study from Neilson Co. of 2,703 financial consumers, 26% would opt in to an overdraft program, 22% would not and 39% were undecided. Furthermore, bank customers who said they would opt in were more likely to have had an overdraft in the last year. According to Neilson, consumers who were undecided had never heard of the regulation or didn’t know much about it.

Neilson also has some interesting particulars from the survey. Key reasons participants cited for for opting in include:

  • They would like to be covered in case of an emergency or an unexpected expense.
  • They have multiple users on their card and don’t always know their balance.
  • They want to avoid embarrassment at check-out.

Survey respondents who say they would either opt out or are undecided cited these as their most prominent reasons:

  • They don’t have enough information about the regulation.
  • They are still thinking about it.
  • They had no idea there was an opt-in/opt-out option.

Check out the entire survey here

Fifth Third’s Garber says that, to make an informed decision, you should evaluate your spending habits. Here’s his list of “pros and cons” for deciding either way.

Opting in: If you want the flexibility of going over your available balance, without having transactions denied, you may prefer this option.

Pro: You can avoid the embarrassment of having your debit card denied if you exceed your available balance.

Con: You will have to pay an overdraft fee if you go over your balance limit. At most financial organizations, this fee ranges between $10 and $40.

Opting out: If you want to avoid paying any additional fees or don’t anticipate going over your account balance limit, you may prefer this option.

Pro: You can avoid paying overdraft fees for everyday debit card or ATM transaction if you go over your available balance.

Con: You won’t have the option of instantly exceeding your available balance in the event of an emergency.

Circle the date – Aug. 15 – and be prepared to declare your “opting” status. What will you decide?

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: What You Should Do — and Not Do — When Meeting a New Dog

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 2,038 more deals!