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Helpful Tips: Personal Finance
Overdraft Honor Changes: Balance Your Account!
Balancing your account can save you money and prevent you from having to pay overdraft fees. Recent regulations have resulted in changes in how banks administer overdraft programs. The administration of these programs and how they affect you can be disregarded if you balance your account and work hard to keep a positive balance in your account.
Overdraft is when you do not have enough money in your account to cover a transaction. (Overdrafts cost $28.00 per item with Lake-Osceola State Bank. Fees vary from bank-to-bank.) Currently you can automatically be enrolled in the LOSB Overdraft Honor program after a probationary period in which your account is maintained in good standing and meets certain criteria. Overdraft honor still charges you $28.00 per overdraft transaction; its advantage is that your items are typically still paid and you don't have the additional return charge at the merchant level.
With the recent changes in regulations (specifically Regulation E), beginning July 1, 2010 all banks must get a request to opt-in from all customers who wish to have their overdraft transactions caused by an ATM or Debit Card paid. If the bank does not have your permission you will not be allowed to overdraw your account and your ATM or Debit Card transaction will be rejected. As a result, if you do not request us to pay your overdraft transactions then your items will be returned. If you request overdraft honor under the new regulation it still works the same way as it does now; $28.00 per overdraft transaction and the bank has the discretion to pay or return items.
It is important to remember that there is no limit to the number of overdraft fees a bank can charge you. If you overdraw your account the bank can charge you the predetermined overdraft fee. As a result balancing your account (see article below for more information) becomes increasingly important. Balancing your account lets you know where you stand and it can potentially save you money by preventing you from having to pay for overdraft fees.
To obtain an Overdraft opt-in form visit our Additional Services page.
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