Federal Overdraft Program Irks Bankers
Bank customers should be expecting some mail in the coming weeks and months, and it’s not a holiday card.
The Federal Reserve Board recently announced new regulations for banks regarding overdraft fees that can be charged to customers. With the new rules, banks must get permission from customers to opt in to an overdraft program, which would allow the customers accounts to fall into a negative balance with a penalty from the bank.
But some local bank leaders expressed frustration with the process of having to ask all of their customers if they want to opt-in to the program, which they said customers value.
“Based on what the Feds are discussing, we are going to have to get in touch with all of our customers and get something back from them in a certain period of time” which will be difficult, said Paul Jalbert, president of Savers Co-Operative Bank in Southbridge.
Snail Mail
Jalbert and other banks, such as Commerce Bank and Trust in Worcester, said they expect to send letters out to customers in the coming weeks and months to begin signing customers up for their overdraft programs. The Federal Reserve Board has imposed a July 1 deadline for banks to get permission from their customers to opt in to the overdraft programs.
Savers Bank has a $25 fee for customers whose checking account balances fall below $0.
Brian Thompson, president of Commerce Bank, said he’s not opposed to having some new regulations regarding overdraft protections. He said some reported abuses by banks are excessive, such as drawing checks that put customer’s accounts into the negative or charging customers upwards of $35 for a $1 overage.
“I’m not sure it’s all bad,” Thompson said about the new regulations. “The hardest part will just be going back and getting everyone to enroll in the program.”
Mark O’Connell, president of Avidia Bank in Hudson, said overdraft protections are important and valued by customers.
He said the alternative to not having overdraft protections is that checks will be bounced and routine debit card purchases will be rejected if a customer does not have sufficient funds.
O’Connell said Avidia has what he considers a reasonable policy that charges a $25 fee if a checking account dips below $5 in the negative.
“A majority of customers don’t have an issue with the overdraft protections,” he said. “It eliminates hassle and embarrassment.”
Middlesex Savings Bank in Natick offers overdraft lines of credit and savings account transfers.
“It’s protection from an occasional error,” said Jim Briand, director of marketing.
WBJ Web Partners
Most Recent
Most Recent
0 Comments