Federal Regulation E Changes

You may have heard about federally-required changes to overdraft policies going into effect this summer.  I’m pleased to report to you that Pacific Service CU has not been affected by these changes. We are already conducting business in accordance with the new law. 

Here’s how our program works:


Our courtesy pay program allows qualified members to overdraw their checking account by check or recurring automated third-party withdrawals when there are not sufficient funds available in the checking account.  The account must be in good standing and is subject to overdraft limits.


More simply, when your gym processes your monthly membership dues, the transaction may be accepted even though you don’t have sufficient funds.  Or, if you write a check to pay your utility bill the check will clear even though there’s not enough money in your account to cover the amount.


We offer this checking account feature to our members as a convenience to avoid the embarrassment, hassle and fees associated with returned checks.  When you take advantage of this service, there is a $25 fee to help cover program costs.  Bank of America charges $35 and Chase Bank charges $34.  An additional advantage of the program is that we will not return the item to the merchant, so you avoid being assessed a returned check fee.


Here’s where the legislation changes come in:

The new legislation is meant to protect consumers from being charged excessively for minor debit card uses, like a $4 cup of coffee.  Many big banks may have abused this practice costing their customers nearly $40 for that $4 latte.


Bank customers must now opt-in to receive this service for cash withdrawals and debit transactions.  Seems minor, right?  Well, the reason this is making news and has the banking industry buzzing is that many of the big banks rely heavily on this fee income.


Some experts estimate that limiting or eliminating this overdraft practice could cost the big banks billions of dollars annually in fee income.  What that means for their customers is that they’ll have to make up for that loss of income elsewhere.


We built our checking account program with the goal of offering fairness and value to our members.   Since we never participated in this type of overdraft practice, our business policies and practices haven’t been affected by the changes.  We already meet all the business requirements of the new law; therefore, no changes are required by us.


In addition to our courtesy pay service, we offer a free overdraft protection program.  Simply designate a free overdraft protection source.  We will attempt to transfer funds from the designated account(s) before we apply the courtesy pay service.  Please call a member service representative if you’d like to set up a free overdraft source, like a savings, money market or Visa account.

1 comment on this post.
  1. Chase credit card application:

    Very nice information.

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