Posted by Anthony Demangone
Yesterday, the Federal Reserve issued a final rule to amend Regulation E to limit the ability of financial institutions to charge overdraft fees for one-time POS and ATM transactions. Under the final rule, consumers must give their affirmative "opt-in" to the overdraft program before such fees can be charged. The compliance effective date is July 1, 2010. Here's a nice, depressing one-page summary.
- The "opt-in" must be given for all accounts. New and existing accounts.
- Anyone who opts in has a continuous right to opt-out.
- You cannot bundle the opt-in for POS and ATMs with overdraft services for checks and other transactions. In other words, ATM and POS transactions get their own, independent opt-in.
- Here's the model opt-in form.
Again, while the rule takes affect 60 days after the final rule is published in the Federal Register, the compliance effective date is July 1, 2010.
My general thoughts?
- This will affect budgeted revenues for credit unions that charge overdraft fees for these types of transactions. Insert this information into your budgeting process as soon as possible.
- It seems that Congress and regulators do not want us to earn non-interest income. Overdraft fees. Over-the-limit fees on credit cards. Interchange. What would your credit union look like if it lost 80 percent of its non-interest income? What would you have to do to survive? Those questions are seeming more and more relevant as time passes.
- I wonder if you'll start seeing a resurgence of monthly maintenance fees on share accounts in the not-to-distant future.
Oh, and have a nice weekend everyone.