The days of free checking in its purest form — no minimum balance required and no monthly service fees — are numbered. A new federal regulation regarding a controversial method of covering overdraft transactions is expected to curtail the fees banks receive. Fees, banks say, that help pay for services associated with free checking accounts. To recoup their losses, most banks will impose rules on free checking aimed at wringing more profit from customer transactions.
The rule, which takes effect July 1, makes overdraft coverage an opt-in service. This rule affects an overdraft service that most checking account customers are automatically enrolled in, not the standard overdraft protection which requires your signature and is linked to a savings account, credit card or line of credit.
Banks that offer overdraft, or bounce, protection will send opt-in notices to customers explaining the service. Banks will not be allowed to charge a fee for paying an overdraft that occurs because of an ATM transaction or a one-time debit card transaction unless the customer agrees. The rule does not apply to overdrafts that occur through the use of checks or ACH transactions such as bill pay.