The Consumer Financial Protection Bureau (CFPB) issued a consumer advisory yesterday on overdraft coverage for checking accounts. Although banks can automatically charge overdraft fees for checks and online bill payments, they cannot charge overdraft fees for ATM or point-of-sale debit card transactions unless the cardholder has opted in. The CFPB offered the following tips to help consumers avoid overdraft charges:
- Opt out of ATM overdraft coverage so that your card is simply declined if there are insufficient funds for a purchase.
- Link your checking account to a savings account or credit card. Although a fee may be incurred, it will likely be less than an overdraft charge and will prevent checking account transactions from ever being declined.
- Track your balance and sign up for low balance alerts, if applicable.
For more, read the full consumer advisory here.