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How Much Would You Pay for Coffee?
Have you ever paid $33.50 for a cup of coffee? It could happen, if you use certain
bank debit cards and overdraw your account, according to a recent study by the Center
for Responsible Lending.
Some banks are approving debit card transactions even when there’s not enough money
in the account. The bank simply extends “courtesy” overdraft money, charges a fee
for the service, and pays the transaction. Some banks even include the amount of
their courtesy protection in the consumer’s available balance. For instance, $200
of courtesy overdraft is added to the $50 true balance, and the receipt shows a
$250 available balance.
UW Credit Union Practice
UW Credit Union does not include courtesy overdraft amounts—called Basic Reserve
at UW Credit Union—when determining whether to approve debit card or ATM transactions.
As consumer advocates prefer, UW Credit Union would decline that debit card transaction
for the $3.50 cup of coffee if the account does not have the funds at the time of
Anyone can make an honest mistake and overdraw their account. UW Credit Union knows
this and provides several overdraft options. For example, transfers from savings
and a Reserve Line of Credit are
two options that are the most economical and will automatically advance, if available,
to cover a shortfall. Basic Reserve (courtesy protection) may also be available
to you for check and ACH (automated clearinghouse) transactions.
If you have any questions, please call us.
*We will approve transactions if the account has money available in a Reserve
Line of Credit. For details or to apply for this optional loan, please contact us.