Serving Texas since 1890

Text Size

Normal SizeLarge Size

The Choice Is Yours

Understanding overdraft services and the changes to your Debit Card & ATM:

Have you ever had a situation where you are making a purchase with your debit card and suddenly realize the check you meant to deposit is sitting in your wallet? You worry and wonder whether that purchase will go through. We can help ease your mind.

New regulations may cause us to decline your ATM/Debit card transactions if you don't have sufficient funds in the account at the time. You can avoid this potential embarrassment and hassle by authorizing us to pay those transactions.

"Opting In" is quick, easy and can be completed online, by mail or at any Legend Bank location.

The Choice is Yours.

The Choice Is Yours

The Choice is Yours.

Legend Bank has provided an efficient overdraft process as a courtesy that has saved many of our checking account customers unnecessary embarrassment and cost. However, after August 15, 2010, an announced change in banking regulations (Regulation E) will prevent us from being able to pay any overdrafts as a result of your ATM transactions or everyday debit card purchases unless you authorize us to do so.

Understanding the change.

  • New legislation affects ATM & everyday Debit Card Transactions.
  • In order to keep business as it is today - understand what changes to expect.
  • August 15, 2010 all existing customer accounts will be affected.
  • If you choose not to "Opt In" your overdraft services may change.
  • You can "Opt In" online, by mail or at any Legend Bank Location.

What is an overdraft?

An overdraft occurs when you do not have enough money in your account to cover a payment you have authorized, but the bank pays it as an accommodation, trusting that you will repay the amount of the overdraft.

What Overdraft Protection services are available?

Today our bank offers a number of options for overdraft protection:

  • Linking a secondary checking, savings or money market account to cover overdraft items.
  • Overdraft Privilege: If an overdraft item is presented, the bank will use discretion to either (1) pay the item or (2) return the item unpaid.

What is Regulation E?

Regulation E (Reg E) is a rule prescribed by the Federal Reserve's Electronic Fund Transfer Act. This act establishes the basic rights, liabilities and responsibilities of consumers and financial institutions. Reg E is being modified to address concerns raised by consumers and policymakers as well as to bring consistency and clarity to overdraft programs. The modified rule affects debit card transactions, specifically ATM transactions and everyday debit card purchases. The rule provides that consumer customers must expressly agree, that is, "opt-in," before our bank may charge a fee for paying an ATM or everyday debit card purchase that will cause an overdraft on the account.

What is an everyday debit card purchase?

Everyday debit card purchases are those one-time purchases that you make using your debit card. For example, when you swipe your debit card at the grocery store or pharmacy, it would be considered an everyday debit card purchase. These purchases are sometimes referred to as POS or point-of-sale transactions. However, everyday debit card purchases do not include those recurring debit card transactions that are often associated with bill payments.

What is excluded from Regulation E?

Checks, ACH and recurring debit card transactions or bill payments are not impacted by the new Reg E rule.

What customers are impacted by Regulation E?

Only consumer (personal) accounts are impacted by Reg E.

What is the time line for the new Regulation E rule?

  • July 1: Accounts opened on or after July 1 cannot be charged a fee until customers have opted in.
  • August 15: Accounts opened before July 1 cannot be charged a fee after August 15 unless customers have opted in.

How is Legend Bank addressing the Reg E changes?

We believe that our customers should be fully informed about any and all services provided on their accounts, and we are making changes to offer a fully disclosed overdraft program. We believe that giving you the choice on how to manage your account is what you want.

How can I apply for Overdraft Protection services?

Contact Legend Bank's Customer Care Center at 800-873-5604 (Mon - Fri 8-5 or Sat 8 - 12 CST) or stop by any Legend Bank location.

How can I avoid overdrafts?

Provided below are some suggestions on how to potentially avoid overdraft situations:

  • Enroll in an Overdraft Protection Plan that links a secondary checking, savings, or money market account to your primary checking account. When the balance of the primary checking account reaches a certain predetermined balance, funds from the secondary checking, savings or money market account will be automatically transferred to the primary checking account preventing the potential NSF.
  • Use all of the tools the bank offers to keep track of your account balances. You can access your account balances through ATMs, online banking and our voice response system. Keep in mind that your balance may not include all pending payments or deposits.
  • Use direct deposit for your paycheck. Your company's payroll department can help you enroll for direct deposit.
  • Keep a cushion of money in your checking account, just to be safe.

Why does the bank pay overdrafts?

Our bank has a standard overdraft practice in which we pay overdrafts at our discretion as we have found that many customers are willing to pay a fee to have their payments processed rather than being returned unpaid. This allows them to avoid the inconvenience, embarrassment, and additional return item fees if a payment is refused. People also want their ATM and debit card transactions paid in order to help them in an emergency or to get through a temporary cash flow problem. A standard fee will be assessed on each insufficient item.

Why do banks assess overdraft fees?

Unpaid overdrafts are a liability for the bank. The bank loses money when it must charge off an account due to a negative balance. The fee is a way for the bank to recover its costs for processing an insufficient or overdraft item and providing its customers the peace of mind that comes with knowing they are covered if an item overdraw their account.

More Information

If you would like to learn more about Regulation E and how it will affect you please visit the sites below.