We‘re committed to fairness and transparency in everything we do, and our overdraft practices are no exception. We know even the most careful consumers sometimes make a mistake, so we have options to help you in those situations. While some financial institutions actually have implemented practices that increase the chances an error will result in significant fee income, we've designed our practices to be fair and help you stay in control, while limiting the financial hardship from common mistakes. The following discussion outlines our business practices and policies related to overdrafts and NSFs (non-sufficient funds). Note: overdrafts, overdraft protection, and overdraft and NSF fees described below do not apply to our Launch, Clear, or Encore account options.
What is the difference between an overdraft and an NSF fee?
An overdraft occurs when you don't have the money available in your account to pay for one or more of your transactions, but as a courtesy (and in most situations) we honor the transactions and allow your account to temporarily have a negative available balance. An NSF occurs when you don't have the money available in your account to pay one or more of your transactions and you have exhausted the available balance of all of your elected overdraft protections (e.g. savings, reserve line-of-credit). The item is not paid by UW Credit Union, and it is returned.
What can I do to help limit overdraft or NSF fees?
We've created an array of low-cost overdraft protection options to help keep you covered.
- Transfer from Savings or Other Accounts – We’ll see whether a transfer from a savings or other checking account would prevent the overdraft. If so, we’ll automatically transfer the money, typically in $100 increments to avoid multiple transfers in the same day. A $5 overdraft transfer fee may be charged to the account receiving the overdraft transfer of funds.
- Reserve Line of Credit – If there isn't enough in savings, we'll see if you have a Reserve Line of Credit. We'll automatically advance enough to cover your account in $100 increments up to your credit limit. A $5 overdraft transfer fee may be charged to the account receiving the advance funds. This option is not set up for accounts held by primary owners under age 18, unless requested. Interest accrues on the outstanding balance until the loan is paid in full.
- Basic Reserve – As a last defense, all checking accounts over 90 days old automatically have Basic Reserve coverage. Access Checking has $200 of coverage; Value has $400; and Premium has $600. There's a $30 charge for this service, the same fee as a returned check, but you'll save the fees charged by merchants. This coverage is not available for individual debit card or ATM authorizations. Basic Reserve coverage is not available to accounts held by primary owners under age 18.
You also have the flexibility to order your overdraft protection accounts to fit your needs. You can view your overdraft protection preferences in Web Branch and customize them to suit your needs by visiting any of our branches or by calling us. You can even choose to decline any of the options listed above, knowing this may result in transactions being declined or returned unpaid.
Any time we advance money as overdraft protection, or pay or return an item that causes an overdraft, we use your “available” balance in the checking or savings account to determine the need for this action. Your available balance may differ from your total account balance for a few different reasons. You may have a debit card purchase still pending, or an electronic debit scheduled to be paid to another financial institution. Your available balance may also be lower due to a “hold” placed on your account for a deposit you made, or because of a minimum balance requirement in the account (e.g. the $5 minimum in any savings account). You should always monitor your available balance, shown separately on the Web Branch Account Summary, to successfully avoid any overdrafts.
Will my account be charged multiple overdraft fees each day?
No. Unlike other financial institutions, our overdraft transfer fee and NSF fee are capped at just one per business day, regardless of how many overdraft items are involved. In addition, if your available account balance is overdrawn by less than $10, you will not be assessed an overdraft transfer fee or an NSF/overdraft fee.
Will my account be charged more than once over multiple days for the same overdraft or negative balance?
No. Unlike other financial institutions, we do not charge a daily negative balance fee or a continuous overdraft fee. If, despite receiving several notices, negative balances are not cleared up over a reasonable amount of time, an account may be shut down. But no additional fees will rack up during that time, unless additional checks or ACH withdrawals are presented.
I've heard some institutions let you overspend with your debit card, and then hit you with overdraft fees. How does it work at UW Credit Union?
We have worked to help members avoid overdrafts by declining ATM and debit card transactions when transactions exceed their funds available; however, the nature of the larger debit card payment system and technical processing limitations sometimes make it possible for the account balance to not reflect other account withdrawals already in process. Even though we do our best to help you avoid spending more than what is available, it is possible in some cases to end up with a negative account balance. However, we do not charge any overdraft fees for transactions related to debit card purchases, except for regular recurring debit card payments like health club dues.
Also, you can choose whether or not we include your available savings balances and available line of credit reserve when debit card purchases or ATM withdrawals are authorized. While most members prefer to have access to all of their available funds, you have the flexibility to make the choice that is right for you. You can review your overdraft protection preferences for your checking account under the “Account Details” link in Web Branch or one of our representatives can assist you. Remember, you may be charged a $5 overdraft transfer fee if you use your debit card or ATM to access funds available in another account or through your line of credit.
Can I create an overdraft getting cash from an ATM?
As with debit card purchases, we help members avoid any $30 overdraft fees by declining ATM withdrawal requests exceeding their funds available. Most ATMs permit you to check the balance of your accounts before making a withdrawal. You can also choose whether or not you want your available savings balances and available line of credit reserve when ATM withdrawals are authorized. You can review your overdraft protection preferences for your checking account under the “Account Details” link in Web Branch or one of our representatives can assist you. Remember, you may be charged a $5 overdraft transfer fee if you use your debit card to access funds available in another account or through your line of credit.
I've heard some financial institutions ask their customers to "opt-in" to pay debit card overdraft fees. What about UW Credit Union?
At UW Credit Union, we put the best interests of our members first and have no plans to ask our members to "opt-in" to pay debit card overdraft fees. After July 1, 2010, Federal Reserve Regulation E provides debit card overdraft fees are not permitted unless customers have agreed to “opt-in” to pay these fees. This allows consumers to agree to let their financial institution charge them for debit card overdrafts, and the financial institution collects these fees. While consumer groups have made it clear they don't believe it would be a wise decision for a consumer to voluntarily "opt-in" to pay debit card overdraft fees, some financial institutions may aggressively market the idea of a consumer "opt-in" program within the boundaries of this regulation.
I like to keep my money where I can get the highest yield. If I overdraw my checking account and have funds available from another account to cover it, why should I be subject to the $5 overdraft transfer fee?
All financial institutions have to pay for the services they provide to customers. Some of these service costs include check processing, ATM network fees when you use an ATM, and bill payment services. Many institutions also require a minimum balance in your checking account to avoid a monthly fee or charge up to $4 per ATM transaction if you use an ATM the bank doesn't own.
UW Credit Union has made it possible for the majority of our members to enjoy these types of services at no cost as well as not requiring members to keep a minimum checking balance to avoid fees. We cover our costs through income like debit card revenue we receive from the card networks and income we make by investing your checking balance at a higher rate of interest than we typically pay on checking balances. The majority of members keep the funds they are spending in their checking account and keep excess funds in a higher yielding certificate, savings or money market account. In fact, account rates are set differently for transactional accounts (e.g. checking) versus a savings account (e.g. money market or certificate). If a small number of members keep no money in their checking (and all in their money market) and the credit union automatically transfers money to cover their negative checking balance, then they are really contributing less to support the costs of the checking service than most members.
UW Credit Union has no requirements to keep a certain balance in your checking account, and it isn't really fair for some members to spend more than what is in their account. The majority of our members support the idea of fairness in which everyone gets a fair deal based on the nature of their relationship with the credit union.
How else are UW Credit Union's overdraft and NSF practices different than other financial institutions?
- Overdraft and NSF fees are limited to one per business day, regardless of the number of overdraft items or accounts involved.
- A $10 negative available account balance grace threshold is also provided (members who overdraw their available balance by less than $10 will not be charged an overdraft fee or transfer fee).
- There are no overdraft fees for debit card transactions except for overdrafts related to recurring debit card transactions like health clubs or cell phone agreements.
- We do not charge a daily negative balance fee or a continuous overdraft fee.
- UW Credit Union helps members avoid fees with online money management tools that include text and email notifications (e.g., low balance notification) so you can stay informed and avoid overdrafts.
- We post checks in the order that minimizes overdrafts. Many other financial institutions have taken the opposite approach and actually post checks in the order that maximizes the number of items considered overdrafts.
- We post debit card transactions in the order we receive them rather than a contrived order which boosts the chances items will be considered overdrafts. Similar to check practices, other financial institutions have taken the opposite approach and actually post debit card transactions in an artificial order increasing the chance a consumer will pay multiple overdraft items.
- We decline to authorize debit card transactions and ATM withdrawal transactions exceeding the funds available rather than permitting the member to unknowingly create numerous overdrafts. We have helped members avoid the situation in which it was possible for a $3 cup of coffee to cost more than $30 because of the overdraft fee.
- We have offered and promoted more affordable overdraft protection services for our members to help protect them from the embarrassment of returned items and costly overdraft fees. These include overdraft transfers from other accounts with a positive available balance or an available overdraft line of credit. Additionally we have never promoted the concept of a member purposefully overdrawing their accounts as a kind of emergency loan. Some financial institutions have communicated to their customers that overdrafts are a sort of "ready" loan. Most consumer groups have discouraged these promotional practices and are in favor of access to traditional credit products—which the credit union continues to offer.
- We enable our reserve line of credit product to function as overdraft protection. Since there is no annual fee for our reserve line of credit, members don't pay for the protection unless it is used. The account receiving the funds is charged a $5 overdraft transfer fee. We make it possible for you to avoid the overdraft transfer fee by making advances online through Web Branch, 24/7, before any overdrafts occur. Some institutions may charge an annual fee which discourages people for having overdraft protection in place.
If I have questions specific to my own situation, what next steps should I take?
We want you to feel in control of your finances. Please give us a call and we'd be happy to assist you with any questions you may have. Please visit any of our branches or call us.