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Overdraft Payment Service

What you should know about overdrafts and overdraft fees

An overdraft occurs when you do not have enough money in your checking account to cover a transaction, but we pay it anyway. We can cover your overdrafts in two different ways:

  • DCU has Standard Overdraft Practices that come with your DCU Checking Account if you opt-in and are approved. We call this our Overdraft Payment Service (the “Service”). This Service is meant to cover unintentional overdrafts and emergencies. This is not a line of credit and any resulting overdrawn balance must be promptly repaid.
  • We also offer overdraft protection plans such as a path that links to a Primary Savings Account, or to a Line of Credit (if you apply and are approved), which may be less expensive than our Overdraft Payment Service. Much of the following applies to our Overdraft Payment Service. For questions about other overdraft protection plans, contact us at 800.328.8797, or visit any of our branch locations.

What comes with DCU’s Overdraft Payment Services if you opt-in and are approved?

If you opt-in to and are approved for DCU’s standard Overdraft Payment Service, the following coverage applies to you:

  • We do authorize and pay overdrafts for the following transactions if you opt-in to our FULL Overdraft Payment Service:
    • Checks and other transactions made using your checking account number
    • Automatic bill payments and other pre-authorized transactions
    • Everyday debit card transactions
  • We do not authorize and pay overdrafts for the following transactions if you have opted into our Overdraft Payment Service excluding debit transactions:
    • Everyday debit card transactions (non-PIN)
  • We do not authorize or pay overdrafts for the following transactions under the Service:
    • ATM transactions
    • Debit card transactions (processed through the PIN network)

NOTE: We authorize and pay overdrafts at our discretion which means we do not guarantee that we will authorize or pay any type of transactions. If we do not authorize and pay an overdraft your transaction could be declined or returned.

How to Opt-In or Out of DCU’s Overdraft Payment Service

Opt-in or Out of DCU’s Overdraft Payment Service, or just change you your selection, anytime:

  • Online: Select Account Manager, Manage Accounts, and then Overdraft Payment Service under Services;
  • Contact our Information Center at 800.328.8797;
  • Stop by any branch location; or
  • Let us know in writing by providing your name, member number, signature and date; the option you’ve chosen:
    • Full Overdraft Payment Service
    • Overdraft Payment Service excluding debit transactions
    • No Overdraft Payment Service

Understanding Your Checking Account Balance and when a Transaction Might Create an Overdraft

Your checking account has two types of balances, the “actual” balance and the “available” balance. You generally have access to view both balances when you review your account online, at an ATM, by phone or at a branch.

The information below explains the differences between your actual account balance and your available account balance.

DCU uses your “available” account balance when determining whether a transaction will overdraw your account.

  • Your Actual (or Current) Account Balance

    Your actual balance is the amount of money that is physically in your account at any given time. Your actual balance reflects transactions that have “posted” to your account. It does not include other transactions that you have initiated but which have not yet reached your account such as debit card purchases that been authorized and are pending or checks you have written that have not yet cleared. Unless you are sure there is nothing outstanding that has yet to post to your account, it is safest not to use the “actual” balance when determining how much money you can still spend.

    Examples of Actual Balance

    • You have a $100.00 actual balance and you write a check for $60.00. Until that check comes in to clear your account, your actual balance will reflect $100.00 because it does not include the pending check transaction which has not yet posted. While your actual balance is $100.00, you know you have already allocated $60.00 of that for the check you wrote.
    • You have a $100.00 actual balance and you make a $60.00 online purchase with your debit card. In most cases, the merchant will submit an authorization hold against your account for the $60.00 however whether or not the merchant does this, your actual account balance remains at $100.00 because the pending online debit card transaction has not yet posted. While your actual balance is $100.00, you again know you have already allocated $60.00 of that for your online purchase.
  • Your Available Balance

    Your available balance is the amount of money that is available to be used and takes into account holds on deposited funds as well as funds that have already been “reserved” or “allocated” for another transaction such as a debit card transaction that you already authorized but that has not actually been withdrawn from the account (in other words, money you have already spent).

    Examples of Available Balance (assuming you have opted-in to full Overdraft Payment Service coverage

    1. You have a $100.00 actual balance and you write a check for $60.00. Until that check comes in to clear your account, your actual balance will reflect $100.00 because it does not include the pending check transaction which has not yet posted. While your actual balance is $100.00, you know have already allocated $60.00 of that for the check you wrote so your “available” balance is $40.00.

      You withdraw $70.00 in cash. The following day, the $60.00 check clears. This draws your account balance negative $30.00 creating an overdraft. The check is paid, and an overdraft fee is assessed. Your resulting balance is negative $60.00:

      $100.00 - $70.00 (cash) - $60.00 (check) - $30.00 (fee) = -$60.00

    2. You have a $100.00 actual balance and you make a $60.00 online purchase with your debit card. In most cases, the merchant will submit an authorization hold against your account for the $60.00 however whether or not the merchant does this, your actual account balance remains at $100.00 because the first pending online debit card transaction has not yet posted. While your actual balance is $100.00, you again know you have already allocated $60.00 for your online purchase so your “available” balance is $40.00.

      You make another (non-PIN based) debit card purchase for $70.00. The following day the first $60.00 debit transaction clears and the next day the $70.00 debit card transaction clears creating an overdraft. Your resulting balance is negative $60.00.

      $100.00 - $60.00 (1st debit purchase) - $70.00 (2nd debit purchase) - $30.00 (fee) = -$60.00

When you overdraw your ‘Available” Balance there may be an overdraft charge. You can avoid this by simply keeping close track of the money you spend regardless of how you spend it. Once you write a check, swipe or dip your debit card, authorize an automatic withdrawal, etc. – you should mentally (or physically in a register of some sort) subtract that dollar amount from your account balance. That way, no matter when the transaction occurs, you will avoid overdrafts.

What fees will you be charged if DCU pays your overdraft?

Under our Overdraft Payment Service:

  • We may authorize and pay items that overdraw your account (overdraft) up to $1500 at any one time.
  • We will charge you a $30.00 fee each time we pay an overdraft up to a maximum of two $30.00 fees per day per checking account.
  • If the overdrawn amount PLUS the applicable fee would result in an overdrawn balance of greater than $1500.00, the transaction will not be authorized/paid*.

NOTE: The Overdraft fee is the same amount that would be charged if the item were returned however, in this case, the item is paid.

*debit card transactions previously authorized must be honored.

How do You Qualify for and Maintain Access to DCU’s Overdraft Payment Service?

  • In order to initially be approved for this Service and to remain eligible, you must be at least 23 years of age and a member in good standing with a DCU Checking Account open at least 90 days. I may. Please understand that although you may opt-in anytime you will not be approved until these conditions are met.
  • Any negative balance that results from DCU having paid an item that causes an overdraft must be repaid promptly. Negative balances not repaid promptly will result in your being suspended or terminated from the Service.

In What Order Will DCU Post Transactions?

In general, transactions will be processed against your account in the following order:

  • DCU will attempt to clear checks (share drafts) drawn against your account on the day of receipt and in ascending order by dollar amount (lowest to highest)
  • Other withdrawals are posted in chronological order based on when DCU receives them. This may include ACH items, debit or credit withdrawals, and other electronic funds transfers.

How Can You Avoid Overdrafts?

Everyone makes mistakes but here are a few things some members do to avoid repeated overdrafts:

  • Record all debit card purchases, checks, Bill Payer transactions, deposits, credits, transfers, and ATM withdrawals in your check register. Do this as soon as you initiate the transaction if it's a withdrawal (i.e. as soon as you write the check, use your debit card, etc.), or as soon as the transaction actually occurs if it's a deposit. Remember to include any recurring withdrawals you have scheduled to ensure the money is in your account before the withdrawal hits.
  • To cover potential mistakes, keep a cash cushion in your account. If you can manage it, an amount equal to one week’s typical bills is a good rule of thumb.
  • Set up a Balance is Less Than Notification in Online Banking. Pick a minimum safety balance and it will send you an email if your balance drops below that amount.
  • Contact billers. If the day you receive your payroll deposits makes meeting your current due dates challenging, many will allow you to modify your due date.
  • Contact BALANCE, a free service offered to our members. This is a no-cost financial education services.
    Visit the BALANCE website: https://dcu.balancepro.org/programs
    Call BALANCE: Call a Financial Counselor, toll-free at 888-456-2227.
  • Above all, make sure there is enough money in your account to cover your transactions before you make and review your account online frequently and your monthly statement promptly to avoid a small mistake becoming a larger problem.

For more information regarding overdrafts please contact us