Overdraft policies could change

TERRE HAUTE, Ind. (WTHI) - One of the nation's largest banks will stop customers from taking out more money than what is in their account. The new Bank of America policies will go into effect this summer. The ripple effects may hit the Wabash Valley.

New federal laws taking effect this summer, require bank customers to opt into overdraft protection. Bank of America's decision goes above that.

Scenario #1 - You're at the grocery store and don't have any money in your bank account. Usually you could still use your debit card to buy items and pay an overdraft fee per transaction. But starting this summer, if you were a bank of america customer, you would have to go hungry. That's why Crystal Cunningham favors overdraft protection.

"My husband lost his job and we had to use the overdraft to pay rent, lights and we got to pay the money back to the bank," said Cunningham. If she didn't have the protection, "We'd been in trouble."

Scenario #2 - You don't realize you're out of money at the coffee shop. And your 3 dollar cup of coffee turns into 38 dollars including fees. And you make several other purchases before you realize the problem. That's why Muteta Maloba is against overdraft protection.

"I hope the bank does that because it will save you money," said Maloba. "After all, whatever you're trying to buy, it's not an emergency because if it's an emergency, then you have to have a plan B."

The only exception to Bank of America's policies is at ATM's. At ATMs, a customer can accept a $35 fee before the ATM allows an overdraft to occur."

Overdraft fees are big business for banks, bringing in billions every year.

First Financial Bank Senior Vice President Richard White said banks that eliminate protection will make up the shortfall in other ways, which in the end will penalize customers who do not overdraw their account. White said overdraft protection is a good tool if used correctly.

"I can see where banks might make a change but I don't necessarily think community banks will do that," said White.

Cunningham said if her bank does away with it, she will find another one.

White said First Financial is still studying the new federal regulations and has made a decision about overdraft protection.

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