Compliance Q&A: Reg E and Negative Balance Fees

May 14, 2010
/ PRINT / ShareShare / Text Size +

Q Does the new Reg E overdraft rule allow credit unions to charge a negative balance fee when the member’s ATM/debit card overdraft leads to a negative balance for a long period of time?



A Under the rule, it doesn’t matter whether you call the fee an “overdraft fee” or a “negative balance fee.” If the fee results from an ATM/one-time debit card overdraft, it’s covered by the regulation.

So, come July 1st (Aug. 15 for accounts opened prior to July 1), the credit union will only be permitted to charge these types of fees for ATM and one-time debit card overdrafts if the member is provided the proper written notice and opts in to the service.

The notice to the member must disclose all applicable overdraft fees, including per-items fees, daily overdraft fees, and sustained overdraft fees where fees are assessed when the member has not repaid the amount of the overdraft after some period of time.

The Fed issued proposed clarifications to the Reg E overdraft rule in late February. The Fed’s proposed clarification (comment 17(b)-9.i) states that where a consumer’s negative balance is attributable solely to an ATM/one-time debit card transaction, the rule prohibits the assessment of any “sustained overdraft fee” if the consumer has not opted in.

However, the rule does not prohibit an institution from assessing a daily or sustained overdraft, negative balance or similar fees or charges if a negative balance is attributable in whole or in part to a check, ACH, or other transaction not subject to the fee prohibition.

In such a case, the date on which the fee may be assessed is determined by the date on which the check, ACH, or other transaction is paid into overdraft. The proposal includes several example of how this works []

Source: CUNA’s e-Guide to Federal Laws and Regulations

Post a comment to this story


What's Popular

Popular Stories

Recent Discussion

Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory ( will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

Your Say: Who should be Credit Union Magazine's 2014 CU Hero of the Year?

View Results Poll Archive