Consumers Must Take Immediate Action To Continue Overdraft Protection Or Risk Being Denied Purchases On Debit Transactions

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Consumers Will Also Be Denied Money at the ATM If Bank Balance is Below Desired Amount

Consumers who want overdraft protection on their bank accounts for debit card and ATM transactions have until August 14, 2010 to provide authorization to their bank. At that time, banks will no longer honor debit card or ATM transactions for accounts that don’t have adequate deposits to cover the amount of the purchase or withdrawal without specific overdraft authorization from account holders, according to the Independent Bankers Association of Texas (IBAT) and SWACHA, one of the largest not-for profit regional payments associations in the country.

Until this federal rule change, many banks offered this service as a courtesy to customers accompanied by a fee. Now, banks will not be able to authorize a courtesy overdraft unless the customer has consented to the fee and the bank has sent written confirmation to the customer either by mail or electronic communications.

“With so many Americans living paycheck to paycheck, the extra time that overdraft protection provides may be the life line that they need from time to time to meet their obligations,” said Dennis Simmons, AAP, SWACHA president and CEO. “While the intent of this new rule is to protect consumers from unwanted account fees, it could hurt them if they don’t know that without this specific consent that has to be submitted between now and August 14, they may be denied money at the ATM or from making a purchase on their debit card. Any authorizations that may have been in place prior to the rule change are no longer valid. It’s important the bank customers realize that they must provide new authorization if they want this service.”

“It is our intention to reach as many Americans as we can with this important message,” said Christopher Williston, IBAT president and CEO. “We want to try to help people avoid the embarrassment of getting denied from buying food at the grocery store, or from not being able to get money to pay bills because they are waiting for their paycheck to be deposited into their account. All it takes is opting into their bank’s overdraft program and they will be fine.”

The new rule does not affect any overdraft protection that a bank customer may have in play for electronic bill payments or other transactions using a customer’s checking account number, overdraft lines of credit or a checking account linked to a savings account.

SWACHA-The Electronic Payments Resource® is a Dallas-based, not-for-profit Regional Payments Association of approximately 1,100 members across the Southwest. SWACHA is the resource of choice for financial institutions and corporations in the areas of education, training, payments system risks and knowledge about electronic payments. SWACHA membership provides advantages such as superior quality training and unique industry resource materials, access to the toll-free Payments AnswerlineTM, Risk Management programs, and representation at the national level in the development of ACH policies and rules. For more information, visit

About IBAT
The Independent Bankers Association of Texas was organized in 1974 “ promote the interests of independent banking in areas vital to independent banks.” Today, IBAT continues to be a pioneer in providing products and services to its member banks.


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Erin Jamison

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