Reg E Changes & Overdraft Charges

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Question:

Regarding Reg E and overdraft charges, currently our bank has a five day continuous overdraft charge. If someone is overdrawn five consecutive days, then we charge $15. If a one time debit or ATM charge causes the customer to be overdrawn, and he has chosen to opt-out, can we still charge the five day overdraft charge?

Answer:

You cannot do this unless the customer also has other transactions (checks, ACH, etc.) as part of his overdraft balance, and then only based on the date of the non-card overdraft. That means you will need some pretty sophisticated capabilities in your system, or you'll have to assess those continuous overdraft fees manually. On March 1, the Fed published proposed amendments to Regulation E to clarify some of the issues raised by the new section 205.17. One of the issues specifically addressed by new proposed Comments to section 205.17(b) is the issue of fees for continuing overdrafts.

First published on BankersOnline.com 3/29/10