Federal Reserve requirements take place on August 15
MARQUETTE -- Making purchases with insufficient funds on your debit card would normally result in penalty fees. Not any more.
As of August 15, New Federal Reserve will require banks to decline those transactions, unless consumers have “opted in” for coverage.
Estimates suggest banks could loose $10-$15 billion in overdraft revenue annually. The new rules do not apply to paper checks or other forms of electronic payment.
Stuart Baker of Greenpath Debt Solutions in Marquette believes this could be a positive change, keeping more people out of debt.
"If they start getting their debit cards turned down, it's probably going to be a little bit of a wake up call to them,” said Baker. “So they actually start looking at what their balances are."
But many banks are encouraging consumers to "opt in" for overdraft protection. Even if consumers choose not to receive the protection, banks and credit unions are offering other solutions to cover shortages.
"You can have money swept in automatically from any of your share accounts to cover any drafts that you've written that may come in when there's no money in the account,” said Ann Olds of the U.P. Catholic Credit Union, “or we do offer an overdraft protection loan."
Either way, experts say the best way to keep your financial records sound is to create a monthly budget and always save a little coin for a rainy day.
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