In regards to overdrafts, do automatic overdraft protection programs qualify as interest bearing credit plans under Regulation O?

Some of our Executive Officers would rather just have overdraft protection instead of linking to another account. For some reason I believe these aren't considered a viable way for an insider to avoid an overdraft violation, but I can't remember where I may have read this.

In regards to overdrafts, do automatic overdraft protection programs qualify as interest bearing credit plans under Regulation O?

Simple answer - no.

Can you tell me where to find something in the regulation to support this? I know I'll need something in writing to back me up. Thanks!

See Reg. O, Sec. 215.3
(b) An extension of credit does not include:

(6) Indebtedness of $5,000 or less arising by reason of an interest-bearing overdraft credit plan of the type specified in Sec. 215.4(e) of this part

So can Executive Officers and Directors have the overdraft protection plan (where they can access additional funds, say up to $500, that they don't have by paying a fee)?

I always interpreted 215.4(e) to mean that they could only link accounts for transfer or have a line of credit linked to their account.

Insiders do not qualify for the courtesy OD plans.

1. They are not an asset account.

2. They are not an interest bearing overdraft LOC credit subject to Reg Z (yet).

3. They are not any other type of interest-bearing extensions of credit.