Have you ever faced the sinking feeling of realizing your checking account balance doesn't quite cover an upcoming debit card swipe? Fear not! Overdraft protection can be a safety net, preventing declined transactions and potential embarrassment. But before you activate this feature, understanding its intricacies is crucial.
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Overdraft protection acts as a financial backup plan for your checking account. When your available balance dips below zero, it allows certain transactions to go through, preventing declined payments.
However, overdraft protection isn't a free pass to spend beyond your means. It usually comes with its own set of fees, so responsible usage is key. According to a 2022 study by the PEW CHARITABLE TRUSTS, nearly half of all checking account holders utilize overdraft protection, highlighting its prevalence but also emphasizing the need for informed decisions.
Using Overdraft Protection Responsibly
Overdraft protection is a safety net, not a financial free-for-all. Here's how to use it responsibly.
1. IF YOU WANT IT, OPT IN
- To be able to use your debit card and draw on the overdraft protection that is connected to your account, you will need to opt-In for it.
2. TREAT IT AS A LAST RESORT
- Remember, overdraft protection comes with fees. Prioritize budgeting, tracking expenses, and building an emergency fund to minimize its use.
Consider it a buffer for minor miscalculations or unexpected emergencies, not a regular spending cushion.
3. MONITOR YOUR BALANCE CLOSELY
- Regularly review your account activity and track upcoming expenses to avoid dipping into overdraft territory.
4. UNDERSTAND THE FEES
- Know the exact per-transaction, daily, and potential NSF fees associated with your chosen option.
5. COMMUNICATE WITH YOUR BANK
- If you encounter unexpected overdrafts due to bank error or extenuating circumstances, contact your bank immediately.
What we do at Liberty Savings Bank
Rather than overdraft protection, Liberty Savings Bank offers “Overdraft Freedom”. This is a courtesy Liberty provides to checking account holders to assist with occasional overdrafts. That means instead of declining your card transaction, Liberty will generally pay the item(s) up to the predetermined limit assigned to your account, saving you additional charges from the merchant or a collection company. Liberty charges our standard overdraft fee for each item, and send you a notice each time an overdraft occurs..png?width=1200&height=400&name=Personal%20Loan%20(5).png)
*It is the policy of Liberty Savings Bank to comply with all applicable laws and regulations and to conduct business in accordance with applicable safety and soundness standards.
The Deposit Account Agreement provided to you at the time you opened your account with us controls the duties, obligations, and rights of the Depositor, the Authorized Signatories, and Liberty Savings Bank with regard to your checking account. The Deposit Account Agreement (and all amendments thereto) and its terms shall control any possible conflict, if any, between any provision of this Discretionary Overdraft Freedom Disclosure and the Deposit Account Agreement. A copy of the Deposit Account Agreement is available to you on request from Liberty Savings Bank.
Overdraft Freedom is not a line of credit. However, if you inadvertently overdraw your account, we will have the discretion to pay the overdraft, subject to the limit of your Overdraft Freedom and the amount of the overdraft fee. Liberty Savings Bank is not obligated to pay any item presented for payment if your account does not contain sufficient available funds. Any discretionary payment by Liberty Savings Bank of an overdraft check (or item, such as an ATM withdrawal) does not obligate Liberty Savings Bank to pay any other overdraft check (or item), or to provide prior notice of its decision to refuse to pay such check (or item).
Pursuant to Liberty Savings Bank’s commitment to always provide you with the best level of service, now and in the future, if you maintain your account in good standing, which includes at least:
- A) Bringing your account to a positive balance within every thirty day period for a minimum period of 24 hours;
- B) Not being in default on any loan or other obligation to Liberty Savings Bank and
- C) Not being subject to any legal or administrative order or levy,
Liberty Savings Bank will have the discretion to pay overdrafts within the Overdraft Freedom Limit, but payment by Liberty Savings Bank is a discretionary courtesy and not a right of the customer or an obligation by Liberty Savings Bank. This privilege for consumer checking accounts will generally be limited to a maximum of $750 overdraft (negative) balance. The privilege for commercial accounts will generally be limited to a maximum of $1,000 overdraft (negative) balance. Of course any and all fees and charges, including without limitation the non-sufficient funds fees (as set forth in our fee schedules and deposit account agreement), will be included as part of this maximum amount. It may be possible that your account will become overdrawn in excess of the Overdraft Freedom amount as a result of the assessment of a fee.
The total of the discretionary Overdraft Freedom (negative) balance, which includes any and all fees and charges, including all non-sufficient funds/overdraft fees, is due and payable upon demand, and Depositor and each Authorized Signatory will continue to be liable, jointly and severally, for all such amounts, as described in the Deposit Account Agreement. Our standard overdraft fee of $37 will be imposed for overdrafts created by checks, ACH, ATM withdrawals, everyday debit card transactions, in-person withdrawals, or by other electronic means. Transactions may not be processed in the order which they occurred, and the order in which transactions are received and processed may impact the total amount of fees incurred.
While Liberty Savings Bank will have the discretion to pay overdrafts on accounts in good standing (as described above), any such payment is a discretionary courtesy, and not a right of the customer or an obligation of Liberty Savings Bank, and Liberty Savings Bank in its sole and absolute discretion can cease paying overdrafts at any time without prior notice of reason or cause.
For our consumer customers, Liberty Savings Bank will not pay overdrafts for ATM or everyday debit card transactions unless Liberty Savings Bank has provided you with the notice required by section 205.17(b) of Regulation E and you have opted in to the payment of these overdrafts. In order to avoid overdrafts due to ATM and everyday debit card transactions, Liberty Savings Bank will place a hold on your account for any ATM or everyday debit card transaction authorized until the transaction settles. ATM and everyday debit card transactions usually settle within two business days after the transaction is authorized. The amount of the hold will be for the amount authorized, or as permitted under applicable payment network rules. Holds on authorized ATM and everyday debit card transactions will be removed prior to settlement where required by applicable payment network rules.
Both consumer and commercial accountholders may opt out of the Overdraft Freedom services for check, ACH, and debit card payment transactions at any time by contacting Liberty Savings Bank.
Overdraft Freedom is available on all accounts except our Clean Slate account.
