Bank survey: Customers opting to pay for overdraft protection

WASHINGTON — A new survey shows 46 percent of bank customers report they did – or will – opt in to their bank’s overdraft program, 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.

he survey was conducted by Ipsos-Reid, an independent market research firm, which polled more than 1,000 adults by telephone August 14-15.

On August 15, new federal regulations went into effect requiring banks to get permission from customers before paying debit card overdrafts and charging a fee for the service.  Previously, no permission was required. 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. The new rules do not affect checks or automatic bill payments.

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.

The results showed:

• 46 percent of bank customers said they did – or will – opt in for overdraft coverage;

• 49 percent of bank customers said they did not opt in for overdraft coverage;

• 5 percent of bank customers did not know or were unsure of their decision.

The margin of error was plus or minus three percent.

“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. “They are now in the driver’s seat and control the way their accounts are managed.”