ELEVEN QUESTIONS . . .
members should ask before signing up for a check overdraft program.

Savvy consumers should ask these questions before enrolling in or accepting a check (or share draft) overdraft program – sometimes known as “bounce protection” or overdraft privilege -- to cover nonsufficient funds (NSF) checks they may write inadvertently or by choice.

1. Is the program mandatory or optional to maintain a checking account at the financial institution?
2. Would it be less expensive and/or more convenient to cover overdrafts automatically with funds from a savings account, credit card or through a small personal line of credit?
3. Fees charged on NSF checks range from $17 to $35 (average $22.50). What fee will I pay?
4. Is the program offered widely to all members, or is it discriminatory and available only to large account holders and high-income individuals?
5. Is my overdraft limit a set amount, that is unchanging, or is it determined by a “matrix” of checking activity and monthly account balances unknown to the member (me)?
6. Is my available overdraft amount shown separately and distinguishable from my own account funds when I use an ATM machine, or is it “disguised” as part of available funds?
7. Does the financial institution offer any education or guidelines to wisely using or relying on overdraft protection?
8. Is the program formally communicated on a frequent enough basis so the member has a complete understanding on how the program works?
9. Does the institution pay the largest NSF check first so that multiple NSF fees accumulate on smaller checks, or does it pay NSF checks in the order they were written?
10. How long do I have to make the check “good” or bring my account back to a positive balance before the NSF check will incur a second penalty fee or additional charges?
11. If I begin to use the overdraft feature too often, as opposed to routinely living within my income, will I be alerted by the institution or receive any personal financial counseling?

John M. Floyd & Associates, Inc. of Houston, Texas, a leading provider of such programs, including JMFA’S OVERDRAFT PRIVILEGESM (www.jmfa.com), prepared these questions for the Consumer Federation of America’s Annual Issues Conference in Washington, DC, Dec. 4, 2003.