Nearly half of bank customers responding to a recent American Bankers Association (ABA, Washington, D.C.) survey reported they did – or will – opt in to their banks’ overdraft programs, saying they are willing to pay a fee for the service to ensure that debit card transactions will be approved even if their account is overdrawn.
New federal regulations went into effect on August 15 requiring banks to get permission from customers before paying debit card overdrafts and charging a fee for the service. Customers who do not opt in for overdraft protection may have one-time debit card transactions or ATM withdrawals declined if their account is overdrawn. Survey respondents were informed that banks can no longer charge a fee for covering overdrafts when they use a debit card unless the customer tells the bank in advance that they want overdraft protection and are willing to pay a fee for the service. They were also informed that if they did not choose to opt in for overdraft protection, their transactions could be denied if their account was overdrawn. They were then asked whether, based on that knowledge, they will choose – or did choose – to have overdraft protection.
According to the ABA, the survey responses were as follows:
-- 46 percent of bank customers surveyed said they did – or will – opt in for overdraft coverage; -- 49 percent of respondents said they did not opt in for overdraft coverage; -- Five percent of bank customers surveyed said they did not know or were unsure of their decision.
"These results show that many bank customers value debit card overdraft protection and are willing to pay for the service," said Nessa Feddis, ABA vice president and retail banking expert, in a press release.
The survey was conducted by Ipsos-Reid, an independent market research firm, which polled more than 1,000 adults by telephone on August 14-15, 2010. The margin of error was plus or minus three percent.
Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio