LUBBOCK, TX (KCBD) - To opt in or to opt out, that is the current question for many checking account users.
A new federal banking regulation means you have to opt in if you want overdraft protection on your ATM or debit cards.
Many debit and ATM card users have already been notified by their bank about this new legislation. Now its up to the consumer to decide what is best for them.
No one ever wants to hear those dreaded words that their card has been declined, but starting on Thursday, anyone opening up a new checking account will have to make the decision whether to opt in or to opt out.
Ellen Hein is the CEO of the Texas Tech Federal Credit Union.
"Opt in means, I want overdraft protection and if my account is overdrawn at a point of sale or an ATM, I want you to pay it and I'll pay you the fee," said Hein.
If you decide to opt out, and you do not have the correct funds in your account, then your transaction will be denied. Daniel Tiprigan is a Financial Planner with Evensky and Katz Wealth Management.
"For most people opting out makes sense, it kind of keeps you honest especially if you are on the low end and you use the overdraft protection frequently then it is probably a good idea to stay opted out," said Tiprigan.
If you do have overdraft protection, fees can cost $20 to $39, depending on your bank.
"We've all heard the story of a $4 cup of coffee costing $40 and that's true, but it is the responsibility of consumer too, the individual to know what's in their account, they shouldn't have that $4 cup of coffee if there weren't funds in their account," said Hein.
Tiprigan says banks made $20-billion just in overdraft revenue last year.
"It's a big money order for them and it's really not a service, it's not really a protection for the consumer," said Tiprigan.
Hein doesn't deny the financial institute's gain, but says she doesn't agree with the new legislation and the government's involvement one bit.
"I think it's a huge mistake for the Congress to get so involved in banking. It's been a horrendous year, it's been a horrendous two years, so to impose more financial legislation on banks and credit unions at this time is horrendous and I'm not a big fan of it at all," said Hein.
New bank accounts will start deciding on this new legislation this Thursday. Existing users will have till August 15th to decide whether to opt in, if you don't sign a release to opt in, you will automatically not be covered by overdraft protection.
Also a good thing to remember is to talk to your bank. There are different types of overdraft protection, if you qualify.
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