What is an overdraft?
An overdraft occurs when a member not have enough money in their account to cover a transaction, but we pay it anyway. PDCU can cover overdrafts in two different ways:
- Courtesy Pay: We have a standard overdraft practice called Courtesy Pay that comes with checking accounts, once the eligibility requirements are met. A Courtesy Pay means that PDCU will cover the overdrafted transaction, so that it is not returned to the sender for non-sufficient funds (NSF). Courtesy Pays must be repaid with interest and result in a significant Fee. But it saves the member from multiple NSF attempts and fees, as well as problems with the party who cashed the check or sent the debit.
- We also offer Overdraft Protection Plans, which will automatically transfer money from another account to cover the overdraft. This may be a much more affordable way to overdraft than Courtesy Pay. For more information, see “Overdraft Protection Plans” section, below.
This notice explains our standard overdraft practices.
What are the standard overdraft practices under Courtesy Pay?
Under Courtesy Pay, we may authorize and pay overdrafts for the following types of transactions:
- Checks and other transactions made from a checking account which doesn’t have sufficient funds to cover that check or transaction.
- Automatic bill payments.
We do not authorize Courtesy Pay overdrafts for the following types of transactions unless you ask us to:
- ATM transactions
- Everyday debit card transactions
We Courtesy Pay overdrafts at our discretion, which means we do not guarantee that we will always authorize and pay any type of transaction.
If we do not authorize and Courtesy Pay an overdraft, your transaction will be declined.
What fees will I be charged?
Under our Courtesy Pay program:
- We charge a fee of up to $30.00 for each Courtesy Pay.
- There is no limit on the total fees we can charge for overdrawing an account.
- We will not pay any overdrafts that cause a checking account to go more than $1,000 into the negative.
If a member has opted out of our Courtesy Pay Program and/or does not meet the eligibility requirements, an NSF fee of $30.00 will be charged each time we reject an item*.
* A particular item may be presented for payment multiple times resulting in an NSF or overdraft fee for each presentment.
How to change Courtesy Pay authorization instructions
Courtesy Pay is a service we offer under most qualifying circumstances. If you have any questions or need to change your preferences for Courtesy Pay, please contact us during regular business hours at (248)263-4100, or toll free at (844) 700-7328.
OVERDRAFT PROTECTION PLANS
Overdraft Protection Plans “links” a checking account to another savings or line-of-credit loan, in order to cover NSF overdrafts. Please see “Important Terms Regarding Overdrafts” section for important information regarding the terms and conditions of our overdraft programs.
How does Overdraft Protection work?
A member can “link” a savings or line-of-credit (LOC) loan account to their checking account. If there aren’t sufficient funds (NSF) to cover a transaction that attempts to debit the checking account, the funds will be automatically transferred from the linked savings or LOC. Two sources of overdraft can be specified (savings before LOC, or LOC before savings.) If there isn’t enough money in any of the linked accounts, a Courtesy Pay will cover the NSF amount (See Courtesy Pay section, above.)
What fees will I be charged?
- A transfer fee of $3.00 each time we transfer funds through Overdraft Protection. This fee is waived if the consumer initiates the transfer online or by any other methods.
- If you have no money available in any of your linked accounts:
- If the member has Courtesy Pay, an NSF fee of $30 is charged for each NSF transaction and PDCU pays the originator. Additional fees or interest may be charged, if the Courtesy Pay is not repaid on time.
- If the member does not have available Courtesy Pay, they are charged a $30 NSF fee and the transaction is sent back to the originator. The originator can attempt multiple times on the same transaction, on different days, resulting in multiple $30 NSF fees for one check or transaction.
- Please refer to our Fee Schedule for more information
- There is no limit on the total fees we can charge for overdrawing an account.
- We may increase fees at any time. See our fee schedule for the most current fees.
How to change Overdraft Protection preferences?
Requests to change Overdraft Protection preferences can be found inside of our website’s Online Banking. There a member can turn Overdraft Protection on or off, or specify the type of account(s) or LOC you want funds to overdraft from. Log into Online Banking at www.PeopleDrivenCU.org and click the “Services” tab to find Overdraft Protection preferences. If you are unable to log into Online Banking, please contact one of our service representatives for assistance at (248) 263-4100 or toll free (844) 700-7328.
IMPORTANT TERMS REGARDING OVERDRAFTS
The following terms apply when overdrafts occur on accounts, regardless of which overdraft service or protection program is in place. This document is incorporated into the Membership and Account Agreement. If the terms of this document are in conflict with terms described in your Membership and Account Agreement, the terms of this document will control. By by using your checking account, a member agrees to the following.
Understanding Obligations Regarding Overdrafts
- We use available balance to determine whether a member incurs overdrafts and associated fees.
- The law permits us to pay items drawn on an account in any order, even if the order in which we pay items causes an overdraft. We may honor any item or instruction even if it creates an overdraft or negative balance in an account or if it violates any minimum balance requirement or other requirements of the account, in which case the member agrees to pay all fees, penalties or other charges imposed as well as costs incurred by us.
- Online postings and transactions are not made, and balance information is not updated, in real time or instantaneously.
- Any item or transaction may be presented multiple times. PDCU has no control over this. Each presentment will be charged a separate overdraft or NSF fee even if it is on the same item.
- Preauthorization holds for debit card transactions placed on sufficient available funds do not guarantee that an overdraft or NSF item will not occur. Transactions may occur after the preauthorization hold that reduces the balance before the final debit card transaction posts to the account (e.g., a previously written check may clear). In such case, the member will be charged an overdraft or NSF fee.
- Having the ability to overdraw, even with overdraft protection, does not relieve a member from duty of making sure there is enough money in their account to cover their transactions.
- Excessive or repeated overdrafts can lead to suspension or termination of a member’s checking account.
- It is the member’s responsibility to monitor and balance their accounts. The member is responsible for any overdrafts caused by them or any joint owner on that account. Overdraft amounts must be paid and accounts brought current for one full business day at least once every 30 days.
- We do not have to notify a member if their account does not have enough money to cover drafts, fees or other posted items.
- We may not pay overdrafts if the member is not in good standing with PDCU. Good standing means:
- must be a member in good standing
- cannot have a defect on another primary account
- must meet the minimum deposit requirements
- must have an account with us for at least 30 days
- are over the age of 18
- account must be brought to a positive balance for one full business day at least once every 30 days
- member is not delinquent 30 days or more on any loan with People Driven Credit Union
- member has no past charge-offs that have not been fully recovered
- There are no tax levies, garnishments, restrictive warnings, or other legal action against the member’s account(s)
- We reserve the right to change fees, change programs, or discontinue programs at any time.
NOTE: We have the right to refuse to pay any overdraft in any given situation for any reason. When a member tells us how they want overdrafts paid, these are their preference. It does not mean that overdrafts will automatically be paid. All overdraft amounts must be repaid.
Understanding “available balance” versus “actual balance”
A checking account has two kinds of balances: an “actual balance”, and an “available balance”. Both balances will change with any given check, debit card, or other transaction as the checking account is used.
What is “actual balance”?
The “actual balance” is the actual amount of money in an account at any given moment in time. It may be referred to on the monthly statement as “current balance” or simply “balance.” It reflects items that have been fully cleared the account and actually posted, but not transactions that are still processing or “pending”.
What is “available balance”?
The available balance is usually a different number than the actual balance. Available balance is the portion of the actual balance that is available for immediate withdrawal or to pay other debit items; it takes into account standard funds availability holds under our Funds Availability Policy, as well as any pending debits and credits we have received but not yet posted to an account (for example, preauthorized debit card transactions, pending checks, transfers, withdrawals, or other holds on an account). Items still in process or on hold may be referred to as “pending” in online banking. The available balance changes throughout the day as transactions occur.
Available balance is the amount of money in an account that is available for use without incurring an overdraft fee.
This is the number to use when determining whether any items or transactions will cause an overdrawn account.
The following examples show how balances work and how an overdraft can occur:
Assume an actual balance of $100 and an available balance of $100. (This means that all transactions have cleared and there are no pending transactions expected to clear the account). Now, if you swipe your debit card at a restaurant for $35, a hold will be placed on your account as the transaction is processed. This will reduce your available balance to $65.00. Your actual balance, however, remains $100 until that transaction is actually posted to your account.
Now, assume that a week prior to the transaction at the restaurant, you had written a check to your friend for $75. She cashes it while your available balance is $65.00. This will cause an overdraft on your account because the check is for more than the available balance, even though the $35 restaurant transaction has not yet posted to your account. The total transactions were $35 (restaurant) + $75 (check) = $110, when your balance was only $100. Once both transactions are posted to your account, your actual balance will be negative $10 and your available balance will be $0.00. You will need to deposit more money into your account to avoid further overdrafts and fees.
Assume you just deposited a large check (over $5,000) into your checking account this morning. Under federal regulations, we can delay availability of those funds for a certain number of days. If we do so, we will notify you at the time you make the deposit. Until the deposited funds have cleared and the hold has been lifted, you will not have those funds as part of your available balance. So, if your available balance at the time you deposit a $6,000 check is $100, your available balance will still be $100 until the hold is lifted. If you had written a check for $4,000 last week and that check is posted before the hold on the $6,000 deposit is lifted, an overdraft will occur.
Reliability of the Available Balance
The actual balance and available balance can both be viewed online. The available balance and actual balance listed may not be completely accurate at any given time viewed, because it may not yet reflect some pending items, e.g., if a check has been written that have not been cashed or deposited yet, or if a preauthorized recurring payment hasn’t been processed yet. Please keep all outstanding items in mind when determining the actual account balance for overdraft purposes. It is the member’s responsibility to know what transactions may still be outstanding.
Will a debit card transaction hold always be the exact same amount as the actual transaction?
No. Some merchants, particularly gas stations, hotels, car rental agencies, and sometimes restaurants will preauthorize an amount greater than the actual transaction. For example, gas stations may preauthorize up to $75.00 because they don’t know how much gas will be pumped at the time you swipe your card. This hold should only last a few hours before it is released and the actual transaction amount is known. This actual amount is often referred to as the “final settlement request” by the merchant to the bank.
A hotel may preauthorize an amount equal to one night’s stay, and can hold that amount for up to 72 hours at the time a reservation is made. At check in, the hotel may also place another authorization to cover any incidental expenses incurred during a stay. Then, at check out, the hotel processes the transaction for the actual amount of the stay. This final settlement may be different from the amounts that they previously preauthorized.
Car rental agencies can also preauthorize an amount greater than the rental to cover any incidental expenses that may be incurred, then process the actual amount (final settlement) upon return of the vehicle.