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Frequently Asked Questions Regarding Regulation E Overdraft Fees on ATM and One-Time Debit Card Transactions

  1. What is the Regulation E Overdraft Fee regulatory change?
    The Federal Reserve issued final rules revising Regulation E concerning overdraft fees that financial institutions may charge their consumer checking account customers. The new rule was published in the Federal Register on November 17, 2009 and has a mandatory compliance date of July 1, 2010. The new rule prohibits financial institutions from charging consumer checking account customers overdraft fees on ATM and one-time debit card transactions unless a consumer consents, or opts in, to the overdraft service for those types of transactions. The final rule does NOT require banks to pay overdrafts on checks or to authorize and pay any overdrafts on ATM or one-time debit card transactions; however, it does permit banks to offer consumers a choice regarding overdraft services for checks.
  2. What type of account is affected by the new rule?
    The new rule applies to only consumer checking accounts.
  3. What types of transactions are affected by the new rule?
    The new rule applies to only ATM and one-time debit card transactions on consumer checking accounts.
  4. What is a one-time debit card transaction and a recurring debit card transaction?
    A one-time debit card transaction is a transaction where the consumer uses a debit card at a point-of-sale (for example, at a merchant or a store), in an on-line transaction, or in a telephone transaction. A recurring debit card transaction is a transaction in which the cardholder provides his/her debit card or debit card number to a merchant for payment of services that are provided on a regular basis. Examples of this include using a debit card to pay for your utilities, cell phone, gym membership, and other types of regularly recurring services provided by the merchant.
  5. What is standard overdraft practice?
    A service under which the bank assesses a fee or charge on a consumer’s account for paying a transaction (including a check or other item) when the consumer has insufficient or unavailable funds in the account. We pay overdrafts at our discretion, which means we do not guarantee that we will always authorize and pay any type of transaction. If you do not have a sufficient memo-ledger balance in your consumer checking account or if you attempt a transaction that exceeds the ATM/debit card withdrawal limitations, we will decline ATM and/or debit card transactions.
  6. What are overdraft protection plans?
    Alternative overdraft services that protect consumers from overdrafts such as, an automatic transfer from another deposit account held or an automatic draw against a line of credit to bring the overdrawn account back to a zero balance or a pre-established minimum balance. The consumer is required to apply, enroll, or authorize such services. The bank must approve a line of credit subject to loan underwriting criteria.
  7. When do debit card transactions post to my account?
    Guardian Bank does not post debit card transactions to your account until the merchant submits the transaction to us for payment. The timing can vary for debit card transactions from the very same day to several days later. In rare circumstances – such as using your debit card online to buy an item that is back-ordered – the merchant could submit the transaction several weeks later.
  8. How can an ATM or every day (one-time) debit card transaction result in an overdraft on my checking account?
    Due to the timing variation described in Q&A #7 above, you may have sufficient funds in your checking account at the time the ATM or one-time debit card transaction is authorized but may not have sufficient funds in your account by the time the transaction is finally submitted by the merchant for posting to your account due to posting of intervening transactions. In addition, merchants such as gas stations and hotels that request a debit card pre-authorization request the authorization for less than the actual transaction and may place a “hold” for more than the actual transaction to try to ensure they get paid for their product/service which may affect your checking account balance. You should ask for a merchant’s pre-authorization policy prior to transaction authorization.
  9. What balance is used to authorize ATM and debit card transactions?
    Guardian Bank authorizes ATM and debit card transactions using the available balance of your checking account. The available balance is the balance at the end of the prior day plus any ACH transactions being posted the current day.
  10. What can I do to avoid overdrafts or declined debit card transactions?
    Enroll in Online Banking to keep track of your checking account. Online banking and mobile banking help you keep track of how much money you have in your checking account as well as the transactions that have been presented and that have been posted to your account. eAlerts alert you by e-mail or text message to your mobile phone when your balance falls below a minimum threshold set by you or when checks post to your account. eStatements are electronic images of your bank statements that are electronically delivered to you sooner than paper statements via snail mail and allow you to track the transactions posted to your checking account. Online banking also allows you to transfer money between your accounts without having to visit the bank.  Apply for our overdraft line of credit.  Call or come by one of our three convenient locations to find out more about our eServices or overdraft protection plans.


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