Credit CARD Act Protects Checking Account Holders, Too
An often overlooked component of the Credit CARD Act can prevent consumers from racking up overdraft fees on their personal checking accounts, according to the Federal Reserve. The Fed posted new information to its consumer information website this month, clarifying some of the ways in which revised credit card regulations apply to debit card and ATM transactions.

Under the terms of the Credit CARD Act, lenders must now obtain opt-in consent from cardholders before processing any charges that would send an account over its credit line. This new rule prevents overlimit fees by rejecting transactions that would have triggered the charges. The same rule applies to debit cards, prepaid credit cards, and ATM cards using standard bank processing platforms.

Therefore, Americans who have shifted much of their daily purchasing to bank-branded debit cards can rest easier about maintaining positive checking account balances. The Federal Reserve's website reminds consumers that automatic overdraft prevention does not apply to checks written on an account, and that charges made before outstanding checks clear can still cause balances to go negative.

About the Author


Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.