Academic journal article Federal Reserve Bulletin

Agencies Provide Consumer Information on Avoiding Overdraft and Bounced-Check Fees

Academic journal article Federal Reserve Bulletin

Agencies Provide Consumer Information on Avoiding Overdraft and Bounced-Check Fees

Article excerpt

The federal bank, thrift institution, and credit union regulatory agencies on October 14, 2004, announced the publication of a new consumer resource, Protecting Yourself from Overdraft and Bounced-Check Fees.

The brochure's key message to consumers is that the best way to avoid overdraft and bounced-check fees is to manage accounts wisely. That means keeping an up-to-date check register, recording all electronic transactions and automatic bill payments, and monitoring account balances carefully.

Many banks, savings and loans, and credit unions offer courtesy overdraft protection or bounce-coverage plans so checks do not bounce and ATM, debit card, and other electronic or automatic transactions go through. But most financial institutions charge a flat fee (often $20 to $30) for each item they cover. Even if a financial institution has a bounce-coverage plan, there is no guarantee an overdraft will be covered.

The federal financial regulatory agencies want consumers to know that careful account management is the lowest-cost way to avoid overdraft and returned-check fees and protect your hard-earned money. If overdraft protection is needed every now and then, consumers should talk with their financial institution or a financial adviser about the choices and services that are right for them. …

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