How to Optimize Your Overdraft Privilege
Making multiple purchases or ATM withdrawals when your account is in the negative is probably not the best use of your money. But if you can plan ahead, you can save.
Here are some ideas:
Choosing the “cash back” option can be cost effective.
- When making a purchase, use your debit card and select the cash back feature. Your merchant may limit the amount of cash they will give you, but if you’re opted in for Extended Overdraft Privilege, the only limit we impose is your overdraft limit. Don’t forget to factor in the fee.
- For example, your account balance is $0. Your limit is $500, and your purchase amount is $370. You can ask for $100 cash back and stay within your limit!
- $0 - $370 (purchase) - $100 (cash back) - $30 (fee) = $500. Now, you can use your $100 cash to make additional purchases without incurring additional service fees.
You can use an ATM to get cash, too.
- Unless you opt in to Extended Overdraft Privilege, you cannot take your account into the negative at an ATM. Once opted in, you can – up to your limit. Don’t forget to factor in the fee.
- Your account balance is $25 but you have an emergency and need $200. Your overdraft limit is $1000. You can go to an ATM and withdraw the $200 you need. Your account will be charged $30 making your new balance -$205.
- $25 (balance) - $200 (withdrawal) - $30 (fee) = -$205.
Overdraw your account at a branch.
- You can withdraw cash at a teller station up to the amount of your overdraft limit – including the service fee.
- If your account balance is $0 and your limit is $1,000, you can go to a branch and withdraw up to $970 in cash. The $30 fee will be applied, maxing out your overdraft limit.
The Fundamentals of Overdraft Privilege
- Overdraft Privilege is provided to eligible members at the discretion of the credit union and can be rescinded at any time without prior notice.
- When you use Overdraft Privilege, a service fee will be charged for each transaction. Currently, the fee is $30; this is subject to change.
- Typically, the overdraft limit is $500. However, if you receive a direct deposit in the amount of $500 or greater within the last 30 days, your limit will increase to $1,000.
- Both the fee and the transaction amount are subject to the limit; for instance, if your limit is $500, a single $470 purchase plus a $30 fee will be covered.
- Overdraft Privilege is not a line of credit.
What is Available Balance?
At Texas Trust, we pay transactions according to the “available” balance in your account.
Here's what you need to know:
- When you make a debit card purchase with a signature authorization, it is put into pending status for up to 4 business days. However, it is deducted from your “available” balance because we put those funds on hold.
- During those 4 days, other transactions may clear your account such as a check you wrote or a bill payment. These types of transactions clear right away.
- Day 1, your available balance is $125. You spend $60 using your debit card with signature authorization. This amount is put on hold, making your available balance $65.
- Day 2, a check clears for $50. Your available balance is now $15.
- Day 3, a Bill Pay payment clears for $80. Your available balance is now negative $65. You incur a $30 overdraft fee, making your available balance -$95.
- Day 4, there was no activity on your account. Your available balance remains -$95.
- Day 5, your $60 debit card purchase from Day 1 settles. Because your account did not have sufficient funds on deposit at this time, the $30 overdraft fee applies, making your available balance -$125.
- So even though you had a positive balance on Day 1 when you made the $60 purchase, by Day 5 when it posted, your account was negative and the fee was applied.
When you deposit a check, some or all of the funds may be placed on hold until the check clears the financial institution on which it was written. This means that even though you’ve just deposited funds into your checking account, those funds might not be available yet. Take care, and don’t prematurely factor them in to your balance.
How Transactions Post
While exceptions can and do occur, we generally post items in the following order:
- ATM and debit card transactions post throughout the day, as they are received. This may not be in the same order as they are made.
- ACH items post in the morning, in the order they are presented.
- Checks post late afternoon in the order in which they are presented.
Keeping Track of Your Spending
We offer several ways to keep an eye on your account:
- eAlerts – stay in the know with a text message or email (or both!) that you set up through Online Banking
- Mobile App – log in to see what has posted and what hasn’t
- VIPS – our automated telephone banking system can provide information 24/7/365
- Online Banking – use the many tools available within Online Banking to manage your account
What Covers What
Here’s an easy to understand table that showcases the differences between Standard and Extended Overdraft Privilege:
|Transactions Covered with Overdraft Privilege||Standard Coverage (No action required)||Extended Coverage (Your consent required)|
|ACH - Automatic Debits||✔||✔|
|Recurring Debit Card Payments||✔||✔|
|Online Bill Pay Items||✔||✔|
|Teller Window Transactions||✔||✔|
|Everyday Debit Card Transactions||✔|
If you would like to change your Coverage for future transactions:
- Contact us through the Online Banking Message Center
- Visit a branch
- Complete the enclosed form and mail it to us at:
PO Box 2260
Mansfield, TX 76063
- Call us at (972) 263-5171
You can discontinue the Overdraft Privilege in its entirety by email, Home Banking Message Center, visiting your local Branch or call us at (972) 263-5171. If you already have Extended Overdraft Privilege coverage, it is not necessary to request it again.
WHAT YOU NEED TO KNOW ABOUT OVERDRAFTS AND OVERDRAFT FEES
An overdraft occurs when you do not have enough money in your account to cover a transaction, but we pay it anyway.
We can cover your overdrafts in two different ways:
- We have standard overdraft practices that come with your account.
- We also offer overdraft protection plans, such as a link to another account or a line of credit, which may be less costly than our standard overdraft practices. To learn more, ask us about these plans.
This notice explains our standard overdraft practices.
What are the standard overdraft practices that come with my account?
We do authorize and pay overdrafts for the following types of transactions:
- Checks and other transactions made using your checking account number
- Automatic bill payments
We will not authorize and pay overdrafts for the following types of transactions without your consent.
- ATM transactions
- Everyday debit card transactions
We pay overdrafts at our discretion, which means we do not guarantee that we will always authorize and pay any type of transaction. If we do not authorize and pay an overdraft, your transaction will be declined.
What fees will I be charged if Texas Trust Credit Union pays my overdraft?
Under our standard overdraft practices:
- We will charge you a fee of up to $30 each time we pay an overdraft
- There is no limit per day on the total fees we can charge you for overdrawing your account
What if I want Texas Trust Credit Union to authorize and pay overdrafts on my ATM and everyday debit card transactions?
If you want us to authorize and pay overdrafts on ATM and everyday debit card transactions, call (972) 263-5171, visit our website at http://www.texastrustcu.org. You can revoke your authorization for Texas Trust Credit Union to pay these overdrafts at any time by any of the above methods.