Checking Account Overdraft: Are the New Rules Better?

A draft in the banking world, is a charge against your account. When you spend money in your checking account, you make a draft from it. Therefore, an overdraft is a draft that exceeds the amount of money you have in your checking account. Let’s say your checking account balance is $50. If you went to the store and attempted to purchase $55 dollars worth of goods and services, you would be making an overdraft. You would then be denied the purchase by the bank and the store. Unless…

Checking Account Overdraft Protection

No Checking Account Overdraft Fees, PleaseMost banks have a service called overdraft protection. This service allows you to overdraft your account, and they will pick up the difference. More convenient and less embarrassing for you. Also more costly. Banks usually charge a overdraft protection fee for this service. In the past, banks would automatically enroll you in this protection. However…

New Checking Account Overdraft Rules

New rules are going into effect in July and August which will require banks to only put you in this overdraft protection service if you have positively “opted in.” You may have received a letter or email recently from your bank regarding this issue. If you don’t opt in, you won’t get the service. Or, better said, you won’t be charged for this service. Some banks may still cover your charge. They just won’t be able to charge the fees. So what kind of fees are we talking about? Well…

Checking Account Overdraft Fees

With the new rules, some banks are scrambling to get customers to opt into their overdraft protection services. Some are dropping the old fee for a new transfer service. To be honest, it’s a bit confusing. Some banks define overdraft protection differently now. Be sure to read through the fine print with your bank and get signed up with the service you desire.  Most online checking accounts come without a fee for overdraft protection. This makes sense because they are most likely connected to the online savings account, and funds can just be transferred between accounts.

Overdraft protection made a lot more sense when people used checks. Checks take time to get to the account and the chances of not knowing if funds are available is a lot greater. I see the need for overdraft protection when you’re talking about avoiding non-sufficient funds fees, returned check fees, and late payment fees from vendors. However, we mostly use cards today, and we have our checking account balance readily available by mobile device and an instant approval at the register.

What are your thoughts on the new rules around overdraft protection? How is your bank changing?

Last Edited: February 15, 2012 @ 9:37 pm The content of is for general information purposes only and does not constitute professional advice. Visitors to should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Philip Taylor

Philip Taylor, aka "PT", is a CPA, financial writer, FinCon CEO, and husband and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.


  1. Edwin Johnson says:

    In your article you mention that the new rules on checking accounts take effect in July and August. My question is, what defines the to dates?

    By the way, good article.
    Edwin Johnson

  2. What do you mean by “to” dates?

  3. Here’s what’s on the Federal Reserve website: If you do not opt in (agree), beginning August 15, 2010, your bank’s standard overdraft practices won’t apply to your everyday debit card and ATM transactions.