Milwaukee’s banks preparing for July 1 federal overdraft changes

Changes will affect one-time debit card, ATM overdrafts

Last November, the Federal Reserve Board ruled that financial institutions may no longer charge customers fees for overdrafts on one-time debit card purchases and ATM withdrawals unless the customer consents to an overdraft service.

The changing federal regulations will require banks to allow customers to choose overdraft protection on their debit card purchases and ATM withdrawals. The new rules become effective on July 1, and many Milwaukee-area banks are now working to create systems that will comply by the deadline.

Spokespersons from Green Bay-based Associated Bank and Minneapolis-based U.S. Bank, both of which have large retail presences in metro Milwaukee, said the banks are now working to develop opt-in overdraft programs by the July 1 deadline.

“Our whole approach is to provide clear, simple choices so customers can decide what’s right for them when the law takes effect this summer,” a U.S. Bank spokesperson said.

Michael Crowley, chairman and CEO of Milwaukee-based Bank Mutual, said his bank is designing its program with a similar intent.

“I think there are a fair number of customers who still want to have that service where they want to use their check card, in the case where they don’t have the exact right amount in their account,” he said.

Bank Mutual is now preparing its computer system for the change in regulations. Its internal software system does not recognize electronic checking transfers from paper checks, Crowley said. The new system will differentiate single-payment debit card purchases from paper checks and electronic utility bills.

U.S. Bank implemented some of its changes on March 31, including the elimination of overdraft fees when a customer’s account is overdrawn by less than $10, and a limit on the number of overdraft fees to no more than three per day.

Bank Mutual anticipates a drop in overdraw fees, but believes that most of its customers will choose to continue the coverage in the long run.

“The key to the whole thing is customer education,” Crowley said. “We will try to make sure they know how overdraft (fees) work and what causes them.

“We think that if they don’t opt in initially, that in the long run that replacement opt-ins will come back into the system again.”


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