Tulsa, Okla. – Some bank customers with ATM or debit cards could be in for an unpleasant shock on Sunday if their cards are declined. August 15 is the day the Federal Reserve's new amendments to Regulation E go into effect.
Regulation E implements the Electronic Funds Transfer Act, which aims to protect bank customers. The new rule states that banks can no longer automatically enroll their customers in overdraft protection - the program which allows them to charge a fee to honor transactions that overdraft customers' accounts.
Unless people explicitly opt in to overdraft protection, starting next week, if they try to buy something or use an ATM and they do not actually have the money in their account, their cards will be declined.
Kirk Hays is an Executive Vice President for Arvest Bank in Tulsa. Arvest implemented Reg E a few days early, on Thursday. He said the new measure could potentially cut into his bank's bottom line.
"If we have 100 customers and 80 of them decide that they want the coverage and 20 of them don't," he said, "we won't get that fee on those 20 customers."
In spite of that loss, he said most customers are opting in - over 80% at Arvest as well as across the country.
Diane Britton, a University of Tulsa employee, is one of those who decided to opt in. She is a customer at Bank of Oklahoma and Skiatook Exchange Bank, and she said both banks can delay posting Friday deposits until after the weekend. Overdraft protection means she can still access her money.
"I know that I'm still covered, even though in my opinion, my money's in the bank, but as far as the bank's concerned, it's not," she said. "I have that cushion, I have that emergency."
Some economists are predicting banks to recover the lost revenue by charging fees on previously free checking accounts, or to raise fees in other places.