Overdraft Protection Laws Change

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RENO, Nevada (KOLOTV.com) -- Banks across the country are changing their overdraft protection policies. The issue came to light in 2008, when the FDIC studied overdraft programs. At that time, they identified the fact that people were most hit with charges, when banks cleared large purchases first, then smaller ones.

This legislation would allow bank customers the decision to get overdraft protection. For the most part, it’s a free service, until that customer overdraws on their account. If a customer does not take part in the protection, their ATM or Debit card transaction would be declined if they didn’t have sufficient funds.

In a poll conducted by the National Foundation for Credit Counseling, 74% of people don’t plan to get overdraft protection and are willing embarrassment at the checkout. 26% of people would opt in to ensure that purchases would be approved, even with the overdraft fee.

Bank of America customer Walter Hinchman says, he can see the pros and cons of the plan, and is banking on the fact that people will become financially responsible.

"I think in the long run it could help them become more fiscally responsible,” Hinchman explained, “If it stops them from spending, then it will tell them-- let's not spend this much money."

However, the NFCC isn’t that optimistic. They say it’s disturbing that people live so close to the financial edge, anticipating that they will overdraw their account, they are willing to exacerbate the problem by paying a fee to have their purchases approved.

Well then, there’s the argument that the government shouldn’t be checking your checks and balance.

"I think people should know how much is in their checking,” Hinchman said. “How much they have to spend and it's their responsibility, their fiscal responsibility to know how much they have, instead of having someone be in charge on that."

We asked David Alves, another Bank of America customer, is it the government’s responsibility to teach people how to balance their checkbook.

"In some ways,” Alves explained, “Yes, I believe that's true, because we pay for schools and I believe school should be teaching that, should be a part of the curriculum."

If you choose to opt out of overdraft protection, here are some ways to keep yourself safe.

Keep the ledger balanced and current. And if you can, link your checking account to a savings account. It doesn’t hurt to have extra pad in your account to cover unplanned expenses. If you can’t pay your bills right away, contact your creditors to adjust the due dates.

It’s important to note, some banks are lowering their overdraft fees. Instead of being slapped with the usual $35 charge, most banks are lowering the price, depending on the amount a customer is overdrawn.