Monday, April 18, 2011

Overdraft Privilege for ATM's and Debit Cards

Unlike many financial institutions in the country, North Alabama Educators Credit Union has never automatically covered a debit card transaction and charged a fee equivalent to an insufficient funds fee. If the money was not available in the checking account, the debit card transaction was declined.

Federal law was enacted in 2010 that now requires consumers to consent or "opt-in" to the availability for overdrawing their checking account with a debit card for ATM transactions or everyday debit card transactions. This was good consumer legislation since it placed the power of the available overdraft privilege access with a debit card in the hands of the credit union member. North Alabama Educators Credit Union now offers Overdraft Privilege on debit cards with a maximum overdraft privilege amount of $500 to qualified members. CLICK HERE for full details and the OPT-IN form on the NAECU program.

Percentage wise, the numbers range from 50-75% of credit union members signing up nationwide for this service. This doesn't mean that 50-75% of credit union members are routinely overdrawing their checking accounts with a debit card. A much smaller percentage of members will actually ever use overdraft privilege, period. Opting-in to Overdraft Privilege for ATM transactions and everyday debit card transactions costs nothing if the service is never utilized.

Why opt-in to Overdraft Privilege for ATM transactions and everyday debit card transactions? It provides a safety net should an emergency occur. Consider an emergency visit on a weekend where that $150 co-pay is due on the spot and you don't have $150 available in your checking account until payday. Also consider the scenario where you have a cart full of groceries and your debit card is declined at the checkout line due to an insufficient checking balance as a result of a mathematical balancing error or unrecorded transaction. An embarrassing situation can be avoided with the Overdraft Privilege service.

Overdraft Privilege is not a loan and should not be considered a line of credit. The credit union offers traditional overdraft loan protection that all checking account members should pursue to lessen the cost of an overdraft. Members are also encouraged to use our free CU-Online Home Banking and free Memberlink Audio Response services to monitor their available balances and prevent unwanted overdrafts.

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