Overdraft Policies Changing

Overdraft policies at banks are always a tricky subject. When a customer tries to cash a check and goes over their funds, what should a bank do? If the bank refuses to honor the check, they are within their rights but the customer may miss their mortgage payment, car payment, rent, etc. If the bank does pay the check and charges a fee to cover it, that could further overdraw the account and lead to more debt. Different banks handle it different ways. Which confuses customers trying to understand how to play by the rules.

Now, the Fed is looking to standardize overdraft policies by making Overdraft Fees an "opt in" proposition. This means it will be LESS likely that you'll see excessive fees when you try to buy a stick of gum, but it means you'll be MORE likely to see a rent or mortgage payment bounce without payment. The changes go into effect July 1, 2010. Be sure to contact your bank before then, to make an informed decision.